Petition for Writ of Certiorari — Law Engineering, Inc. v. Georgetown Steel Corp.

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89-1695 |, |

No. 1 PR 30 ee |

. 7 JQSEPH FSP NOL, dRa

IN THE bere

Supreme Court of the United States

Octoser TERM, 1989

—_

LAW ENGINEERING, INC.,

Petitioner,

GEORGETOWN STEEL CORPORATION and

UNION CARBIDE CORPORATION,

Respondents.

PETITION FOR WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

PETITION FOR WRIT

OF CERTIORARI

GeorceE D. WENICK

(Counsel of Record)

Rosert O. FLEMING, JR.

SMITH & FLEMING

2300 Peachtree Center Tower

230 Peachtree Street, N.W.

Atlanta, Georgia 30303-1505

(404) 522-2300

Counsel for Petitioner

April 30, 1990

Tower Printing Company, 2 Peachtree St., Atlanta, Georgia 30383, (404) 659-4080

QUESTION PRESENTED

Whether the United States Court of Appeals for the

Fourth Circuit, in reversing four major factual findings in

a 48-page trial court decision rendered after a six day non-

jury trial, misinterpreted or misapplied the “clearly

erroneous” standard of F.R.Civ.P. 52(a), engaged in a de

novo weighing of the evidence, and substituted its own

findings of fact for those of the District Court in

contravention of the standard announced by this Court in

Anderson v. City of Bessemer City, 470 U.S. 564, 573-75

(1985).

PARTIES TO THE PROCEEDINGS BELOW

1. Law Engineering, Inc., Petitioner.”

Law Engineering, Inc. was formerly known as Law

Engineering Testing Company, and was so identified in

the proceedings in the District Court and the Court of

Appeals.

2. Georgetotbn Steel Corporation, Respondent.

3. Union Carbide Corporation, Respondent.

4. Pittsburgh Testing Laboratory, Inc.

Petitioner believes, and hereby notifies the Clerk

pursuant to Supreme Court Rule 12.4, that Pittsburgh

Testing Laboratory, Inc. has no interest in the outcome of

this petition.

* There are no parent or subsidiary corporations of Law Engineering,

Inc. required to be listed under Supreme Court Rule 29.1.

TABLE OF CONTENTS

Page

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Te le Fe Be a cect cn esesnccsvervcvcsvsnecseccovencenvesereoessenee Vv

CITATION TO REPORTED OPINIONS IN THE

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JURISDICTIONAL STATEMENT........-..sccscsseseseeseseeeenseeeeeeees vii

STATUTORY PROVISIONS INVOLVED IN THE

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a ililshiarnisiesninesiresteivenabenmmmeanenensoerennartsesencnetonsoenses 3

A. Reasons Why the Writ Should Be

_ 3

B. Absence of Negligence or Breach of

SE ccetinticdeveinietononniavyuesninmmresnenvcverstonrvenevenesvecourins +

C GSC’s Contributory Negligence .............scesereseees 8

D. GSC’s Status As Agent of UCC..........ccccccseeeeeees 10

aca hanciniecdannesthocorenierteiesimmewsceeminenssennere 14

APPENDIX

A. Opinion of the Court of Appeals for

the Fourth Circuit........ siapesceiaessdaininiodeaetitesidninenenieisien la

iii

. Order (with Findings of Fact and

Conclusions of Law) of the District

Judgment of the District Court filed

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. Order of the District Court (granting

motion to amend the judgment) filed

PE Se Be icictsticstecdeernvcinnddiciinitdencus

. Amended Judgment of the District

Court filed November 29, 1988..................

. Order of the Court of Appeals for the

Fourth Circuit, on Motion for

Rehearing, filed January 29, 1990.............+.

tenis . 80a

TABLE OF AUTHORITIES

Cases Pages

Anderson v. City of Bessemer City,

FO US. 566 CIGEB) cnccevcvercccveceeseccscscce i, 2, 3, 4,5, 8, 14, 15

Anderson v. City of Bessemer City,

FEF Fe BEF GU Ga Baie ceiccccccesncevensccesosoevenenmnnenenonsive 2

Banker’s Trust of South Carolina v. Bruce,

SEE GBRAE SES GC. ADD. 19GG) .ncceccccccoccecorcccsscnsesersoseee 11

Bear Brand Hosiery Co. v. Tights, Inc.,

OE Fe Fae Pe Oe, FIFI ctteccevsccevcvcscccscensccscesesnevevinens 5

Bonds v. Mortensen and Lange,

FEF FE TB GI Ce. TOG cccccccvccccoseccccsenemnscoscesencenenentn 5

Cohen v. Boxberger,

SOG PDE FOE GER CAr. 1GF6). nncccccecccccasercoreoveserensonasecontes 10

Courtney v. Remler,

| 556 F. Supp. 1225 (D.S.C. 1983),

aff'd, 745 F.2d 50 (4th Cir. 1984). ......:scsccsecssecsseeseesesees 11

Crawford v. Powers,

639 F. Stapp. 723 TOGA. 1976) ....cececccsccovvssvessocscsescoeneesen 6

Fernander v. Thigpen,

BIO DEBE GE GL... TIED recectecocsccrecsconcsorovcsrvenssenesiiines 11

Gathers v. Harris Teeter Supermarket, Inc.,

S47 C.E.2ek 76S GADD. TID 0) anencccecccccveccscncecosesticnrsees 10

Gilliland v. Elmwood Properties,

379 SBDd SEZ GLADD. 19DB). .cccrccccsccscscservesicnscersssese 6,7

Pullman-Standard v. Swint,

I Tecan sres osctsiceaeiiniiniindianiiiislaici 5,11

Statutes and Rules

SEITE > SIE ieetseneveccecsvesensueeessonsnensoestees i, viii, 2, 3, 5, 6, 11, 15

SEITE ISD scarcishcenesviownpesiinsnseipariiesinadseuesiasiianuanioanmmndantatatak 3

CITATION TO REPORTED OPINIONS

IN THE CASE

The decision of the United States Court of Appeals

for the Fourth Circuit is reported, without published

opinion, at 892 F.2d 1041 (1990). The decision of the

District Court is not reported.

JURISDICTIONAL STATEMENT

The decision of the United States Court of Appeals

for the Fourth Circuit sought to be reviewed was entered

December 15, 1989. An order denying a petition for

rehearing was entered by the Court of Appeals on

January 29, 1990. This Court has jurisdiction to review the

decision of the Court of Appeals by writ of certiorari,

28 U.S.C. § 1254(1).

vii

STATUTORY PROVISIONS

INVOLVED IN THE CASE

F.R.Civ.P. 52:

(a) Effect. In all actions tried upon the facts

without a jury or with an advisory jury, the

court shall find the facts specially and state

separately its conclusions of law thereon, and

judgment shall be entered pursuant to Rule 58;

and in granting or refusing interlocutory

injunctions the court shall similarly set forth

the findings of fact and conclusions of law

which constitute the grounds of its action.

Requests for findings are not necessary for

purposes of review. Findings of fact, whether

based on oral or documentary evidence, shall

not be set aside unless clearly erroneous, and

due regard shall be given to the opportunity of

the trial court to judge of the credibility of the

witnesses. The findings of a master, to the extent

that the court adopts them, shall be considered

as the findings of the court. It will be sufficient if

the findings of fact and conclusions of law are

stated orally and recorded in open court

following the close of the evidence or appear in

an opinion or memorandum of decision filed by

the court. Findings of fact and conclusions of

law are unnecessary cn decisions of motions

under Rules 12 or 56 or any other motion except

as provided in Rule 41(b).

viii

No.

IN THE

Supreme Court of the United States

Octoser TERM, 1989

LAW ENGINEERING, INC.,

Petitioner,

GEORGETOWN STEEL CORPORATION and

UNION CARBIDE CORPORATION,

Respondents.

PETITION FOR WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

—

PETITION FOR WRIT

OF CERTIORARI

STATEMENT OF THE CASE

This case involves the reversal, on “clearly erroneous”

grounds, by a sharply divided panel (opinion by Judge HALL;

concurrence in the result only by Judge WIDENER; dissent by

District Judge Joseph F. ANDERSON, Jr.) of four major factual

findings in a 48-page trial court opinion rendered after a six

day non-jury trial. District Judge Falcon B. HAWKINS, who

heard all the evidence and evaluated the credibility of witnesses,

determined that Petitioner Law Engineering, Inc. (“Law”) was

not negligent and breached no warranty; that Respondent

Georgetown Steel Corporation (“GSC”) was, in any event,

contributorily negligent; and that GSC acted as agent for

Respondent Unicn Carbide Corporation (“UCC”), so that

GSC’s negligence is imputed to UCC. Judge ANDERSON

would have affirmed those findings of fact because they

are “plausible in light of the record viewed in its en-

tirety.” Anderson v. City of Bessemer City, 470 U.S. 564,

574 (1985).

In reaching a contrary result, the Court of Appeals

violated the Anderson standard by improperly substitut-

ing its own findings of fact for those of the District Court,

and misinterpreted or misapplied the “clearly erroneous”

standard of F.R.Civ.P. 52(a). The Court of Appeals’ opin-

ion also contains an internal inconsistency, on the issue

of contributory negligence, which cannot be harmonized.

The reversal imposes liability on Law and remands the

case for a determination of damages, with more than $5

million at issue.

The underlying dispute arises out of GSC’s use of

steel slag, a by-product of the steelmaking process, as fili

under an oxygen separation plant (and several other

structures) owned by UCC and located on GSC’s property

in Georgetown, South Carolina. GSC hired Pittsburgh

Testing Laboratory, Inc. (“PTL”), in 1979, to perform cer-

tain tests on its slag. GSC hired Law, in 1980, to perform

test borings and write a soils report for the oxygen plant

* Two members of the panel in this case, Judges HALL and WIDENER,

also participated in the Fourth Circuit's decision in Anderson v. City of

Bessemer City, reversed by this Court. See, 717 F.2d 149 (4th Cir. 1983).

site, and to perform quality control testing during con-

struction. After construction was complete, the slag ex-

panded and destroyed the oxygen separation plant, and

GSC filed suit against PTL and Law alleging negligence

and breach of warranty. GSC also filed suit against UCC

for a declaratory judgment as to their respective rights

and obligations. UCC cross-claimed against Law and PTL.

Jurisdiction in the District Court was based on diversity of

citizenship, 28 U.S.C. § 1332.

ARGUMENT

A. Reasons Why the Writ Should Be Granted.

This case deals solely with a clear case of a sharply

divided panel of the Court of Appeals conducting a de

novo weighing of the evidence, and impermissibly substi-

tuting its findings of fact for the fully supported factual

determinations of the District Court. The Court of Ap-

peals has thus decided a federal question, application of

the “clearly erroneous” standard of F.R.Civ.P. 52(a), in a

way that directly conflicts with the decision of this Court

in Anderson v. City of Bessemer City, 470 U.S. 564, 573-75

(1985).

This case, we must in candor concede, presents no

other “special and important reason” (Supreme Court

Rule 10.1) for granting the petition. That cannot mean,

however, that a petition for writ of certiorari must auto-

matically be denied, for then there would almost never be

an occasion to assure compliance by the Courts of Appeal

with the “clearly erroneous” standard of Rule 52(a). That

argument surely proves too much. Maintaining the in-

tegrity of the District Court’s role in factfinding has been

of sufficient importance to engage this Court's attention

on more than one occasion in the past, including Ander-

son v. City of Bessemer City. The standard clearly articu-

lated in that decision has been ignored. Exercise of this

Court’s power of supervision is not only appropriate, it is

essential.

B. Absence of Negligence or Breach of Warranty.

On the basis of the “credible testimony” before it, the

District Court concluded that the contract between GSC

and Law did not impose on Law the obligation to deter-

mine if GSC’s slag was expansive — only whether the slag

could be sufficiently compacted. The Court of Appeals ac-

knowledged the absence of any express contractual basis

for imposing such a duty on Law. Nonetheless, the Court

of Appeals ignored the District Court’s finding and erro-

neously held that Law “specifically approved the use of

GSC’s slag to support the foundations.”? The parties never

?The Court of Appeals characterized one of three alternative recom-

mendations in Law’s March 24, 1990 report — dynamic compaction of

the existing slag and sand fill — as “specific approval” of the slag for

use as fill. Even if that characterization were accurate, it would not

support a finding of iiability: That recommendation was withdrawn

when Law clarified its report on August 29, 1980, prior to the start of

construction. The Court of Appeals also characterized a statement in

Law’s September 9, 1980 letter — “[w]ith verification of . . . gradation,

we anticipate the processed material will be suitable for use in the

backfill required within the Oxygen Plant” — as approval of the use of

slag as fill material. Without any explanation, the Court of Appeals

simply rejected the District Court’s finding that this statement was

made only with respect to whether the slag could be sufficiently

compacted, not whether it might be expansive. Since the District

Court’s finding was based on “essentially undisputed evidence,” the

Court of Appeals’ opposite conclusion after reviewing the same record

intended that Law determine or pass judgment on the po-

tential expansiveness of GSC’s slag, and the reason is

clear: The slag had already been tested by PTL, and GSC

had been assured by PTL that the slag was not expansive.

The intent of contracting parties is a question of fact.

Bear Brand Hosiery Co. v. Tights, Inc., 605 F.2d 723, 726

(4th Cir. 1979). Determination of intent involves

“peculiarly factual issues for the trier of fact,” subject to

the “clearly erroneous” standard. Pullman-Standard v.

Swint, 456 U.S. 273 (1982). The District Court’s determina-

tion of the parties’ intent is entitled to special deference

because it is based on the credibility of witnesses.

F.R.Civ.P. 52(a); Bonds v. Mortensen and Lange, 717 F.2d

123, 125 (4th Cir. 1983).

When the Court of Appeals ignored the substantial

evidence in the record supporting the District Court’s

findings that “[nJothing in any of the discussions between

GSC employees and Law employees and nothing in any of

the agreements between GSC and Law indicates that GSC

expected Law to determine the suitability of the slag back-

fill in any other respect besides compaction,” and that

“the scope of Law’s duty to GSC included a determination

that the slag backfill could be and was appropriately com-

pacted to support a load of three thousand (3000) pounds

per square foot, but did not include a determination that

the slag was not expansive,” it impermissibly substituted

its judgment for that of the District Court, in contraven-

is an impermissible de novo weighing of the evidence. Anderson 0.

City of Bessemer City, 470 U.S. at 576.

tion of Rule 52(a). The Court of Appeals cannot have de-

termined that those findings were not material to the

negligence issue, for that would be tantamount to an-

nouncing a rule of law which would impose on Law an

affirmative duty to act independent of the terms of its

contract with GSC, in contravention of established South

Carolina law.

In Crawford v. Powers, 419 F.Supp. 723, 729 (D.S.C.

1974) (applying South Carolina law), the Court stated:

Where the only relation between the parties is

contractual, liability must arise out of some pos-

itive duty which the law imposes because of the

relationship or because of the negligent manner

in which some act provided for in the contract is

performed.

No such duty or relationship, independent of their con-

tracts, exists between Law and GSC. That conclusion is

compelled by Gilliland v. Elmwood Properties, 375 S.E.2d

342 (S.C.App. 1988), which involved a claim that an archi-

tect was negligent in failing to design a project to qualify

for tax exempt bond financing, failing to observe the pro-

ject’s budgetary constraints, and failing to obtain neces-

sary governmental approvals. Since the contract was si-

lent regarding such duties, the Court concluded:

Ordinarily, there is no duty except as the contract

creates and the remedy is for breach of contract,

however, when the breach of duty arises out of

liability independently of the personal obliga-

tion undertaken by contract, it is a tort. For a tort

to arise out of a contract, there must also exist a

relationship, irrespective of the contract, that

gives rise to a duty. Mere breach of a contract is

not actionable as a tort. In the instant case, there

exists no duty or relationship independent of

the contract. 375 S.E.2d at 345 (emphasis add d).

South Carolina law does not impose an affirmative duty

to act — such as, in this case, the duty to test slag to de-

termine whether or not it has expansive properties — in

the absence of agreement. The District Court’s factual

findings were thus material to the negligence issue, were

supported by substantial evidence in the record, and

should have been affirmed.

The District Court also concluded that the only war-

ranty existing between GSC and Law was that defined by

the “Warranty and Limitation of Liability” provision in

their contracts:

The only warranty or guarantee made by Law

Engineering Testing Company in connection

with the services performed hereunder, is that

we will use that degree of care and skill ordinar-

ily exercised under similar conditions by rep-

utable members of our profession practicing in

the same or similar locality. No other warranty,

express or implied, is made....

Thus the only warranty given was that Law would per-

form its tasks — that is, what it had contracted to do —

with that degree of skill and care exercised by engineers

practicing in the locality.2 The District Court found “that

the testimony was clear that an engineer in this or any lo-

> Law’s proposals and reports were issued by its Columbia and

Charleston, South Carolina offices. The Court of Appeals’ statement

that the “report to GSC was issued out of Law’s Birmingham, Alabama

office” is incorrect.

cality performs the task required by the agreement pur-

suant to which he acts.” That conclusion finds ample

support in the testimony of Law’s expert witness. Based

on the language of the agreements and the fact that GSC’s

representative assured Law that the slag had been success-

fully used as fill on prior projects, the District Court con-

cluded that the contracts between Law and GSC did not

impose on Law the duty to determine whether slag was

expansive, and the warranty had not been breached.

The Court of Appeals, having erroneously concluded

that Law’s duties included a determination of the expan-

siveness of the slag, also reversed the District Court on

this point. In so doing, the Court of Appeals again im-

permissibly substituted its judgment for that of the Dis-

trict Court, since the findings of the District Court were at

least “plausible in light of the record viewed in its en-

tirety.” That is true even though the District Court’s

finding was based in part on “physical or documentary

evidence,” rather than on credibility determinations

alone. Anderson v. City of Bessemer City, 470 U.S. at 574.

C. GSC’s Contributory Negligence.

In 1979, the year before Law’s involvement with GSC

began, a problem developed with a railroad track scale (an

in-ground concrete structure containing a scale for weigh-

ing railroad cars), which GSC had backfilled with slag. The

walls deflected inward and bound the scale mechanism.

The District Court concluded that GSC was negligent in

failing to recognize that the problem with the track scale

was caused by expanding slag; in not having the slag

tested further when those problems developed; in not

telling Law of the problems at the track scale; and in

telling Law that it had used slag successfully, when, in

fact, there had been a problem. The District Court con-

cluded that GSC’s contributory negligence was a proxi-

mate cause of the damage to the oxygen plant, barring any

recovery by GSC.

The Court of Appeals agreed that GSC was negligent,

but nonetheless concluded that GSC’s conduct did not bar

recovery because it was not a proximate cause of the dam-

age to the oxyge™ plant. It was not only factually unwar-

ranted but logically untenable for the Court of Appeals to

reverse the District Court’s finding of contributory negli-

gence as “clearly erroneous.” It is untenable as a matter of

logic to reverse the District Court’s finding of proximate

cause, with respect to Law, while at the same time affirm-

ing the District Court’s finding that GSC’s negligent con-

duct — precisely the same conduct — was a proximate

cause of the damage to the oxygen plant so as to bar re-

covery against the other defendant in this case, PTL. With

respect to GSC’s claim against PTL, the Court of Appeals

held:

Under the circumstances, Rishel [GSC’s plant

engineer] should have been on notice that the

slag may have been swelling. There was testi-

mony that a reasonably prudent civil engineer

with Rishel’s background and knowledge

should have suspected slag swell as the problem

with the track scale, and should have, at that

point [i.e., in 1979, prior to Law’s involvement

with GSC], had the slag tested again to deter-

mine if it was causing the problem at the track

scale. On the basis of this evidence and that

which indicated that GSC itself had knowledge

that its slag had expansive qualities, we cannot

say that the district court’s finding that GSC was

contributorily negligent was clearly erroneous.

There is no logical explanation as to how GSC’s neg-

ligent conduct can be a proximate cause of the damage to

the oxygen plant with respect to PTL, while the very same

negligent conduct is not a proximate cause of the very

same damage with respect to Law.

GSC’s failure to recognize the expansive nature of its

slag was either a “cause without which injury would not

have occurred,” or it was not. The same result must ob-

tain as to both defendants. The inconsistency cannot be

harmonized; it certainly cannot sustain the Court of Ap-

peals’ conclusion that in only one of two indistinguish-

able instances the District Court’s finding was “clearly er-

roneous.”

Proximate causation is a question of fact. Cohen v.

Boxberger, 544 F.2d 701, 704 (4th Cir. 1976). Significantly,

the Court of Appeals did not say that the District Court’s

finding of proximate causation lacks support in the

record; instead, the Court of Appeals simply reviewed the

same evidentiary record and drew a different conclusion,

in violation of the Anderson v. City of Bessemer City

standard.

D. GSC’s Status As Agent of UCC.

Under South Carolina law, the existence of an agency

reiationship is a question of fact. Gathers v. Harris Teeter

Supermarket, Inc., 317 S.E.2d 748, 752 (S.C.App. 1984). The

District Court made a factual finding that GSC was acting

as UCC’s agent when it contracted with Law, so that the

duty owed by Law to UCC is identical to the duty owed to

GSC. Since the District Court also concluded that the con-

tracts did not include the duty to determine whether

GSC’s slag was expansive, it denied UCC’s negligence and

breach of warranty claims against Law. In addition, GSC’s

contributory negligence was imputed to UCC. The Court

of Appeals reversed the finding of agency as “clearly erro-

neous,” again ignoring substantial evidence in the record

supporting the District Court’s finding.

Before summarizing that evidence, the legal frame-

work within which it fits must be defined. Under South

Carolina law, the relationship of principal and agent does

not require an express appointment and acceptance, but

may be and frequently is inferred from the words and

conduct of the parties and the circumstances of the case.

Banker’s Trust of South Carolina v. Bruce, 323 S.E.2d 523

(S.C.App. 1984). The agency relationship depends on in-

tent, Courtney v. Remler, 556 F.Supp. 1225 (D.S.C. 1983),

aff'd, 745 F.2d 50 (4th Cir. 1984).‘ The agency relationship is

distinguished from that of independent contractor by the

principal’s power to control the means and methods em-

ployed by the agent, not just the result. Fernander v.

Thigpen, 293 S.E.2d 424 (S.C. 1982).

In addition to the facts cited by the District Court in

its opinion, the following evidence in the record, over-

looked or igncred by the Court of Appeals, establishes the

requisite intent and shows that UCC had the power to and

‘ As observed earlier, determination of intent involves “peculiarly fac-

tual issues for the trier of fact,” subject to the “clearly erroneous” stan-

dard of Rule 52(a). Pullman-Standard v. Swint, 456 U.S. 273 (1982).

actually did control the means and methods employed by

GSC, not just the result.

In December, 1979, before Law was first contacted by

GSC, representatives of GSC and UCC met to discuss the

proposed oxygen plant. Charles Cullinan, UCC’s Project

Manager for the oxygen plant, wrote a letter to confirm

the discussion. Mr. Culliinan’s letter included the follow-

ing item:

There are many apparent encumbrances under-

ground on the specified site. GSC has agreed to

have a soils report prepared by a competent

firm. This work must include test borings. If it is

determined that piling is not possible, GSC will

have to prepare the site for compacted fill ca-

pable of 3000 psf loading.

UCC specified exactly how GSC must have the site inves-

tigated (“by a competent firny’), what type of investigation

must be performed (“must include test borings”), and

what would have to be done if piling foundations were

not feasible (“prepare the site for compacted fill capable of

3000 psf loading”). Thus UCC, from the outset, took con-

trol of the means and methods by which the site would be

investigated prior to construction. GSC thereafter retained

Law to investigate the proposed oxygen plant site in

compliance with UCC’s detailed instructions.

In March, 1980, Law issued a written report on the re-

sults of its investigation. Sometime in June, Steve

Blevins of Law was contacted by telephone by Ross John-

son, Supervisor of UCC’s Civil Engineering Group. Mr.

Johnson expressed his concern, after reading Law’s report,

about possible differential settlement which could ad-

versely affect sensitive process piping. UCC thereafter di-

rected GSC, which in turn directed Law, to prepare a new

report clarifying Law’s recommendations in light of

UCC’s concerns.

In September, 1980, Steve Rishel of GSC called Steve

Bievins of Law and requested a proposal for quality con-

trol testing during construction. Once again, GSC was

dancing to UCC’s tune. As UCC’s Mr. Cullinan testified:

Georgetown Steel was going to start excavation.

We were not to keep anybody on the site. We’d

have no reason to do that. But as a matter of

prudence, we wanted to make sure that Law

Engineering was involved to make sure that

was done properly.

Again, UCC specified the means (“make sure that Law

Engineering was involved”) to be followed in obtaining

the desired result (“make sure that [placement and com-

paction of fill] was done properly”).$

GSC did exactly as UCC instructed. On September 29,

Mr. Rishel wrote a memo to his boss, outlining the pro-

cedure which would be followed for preparation of the

oxygen plant site. Mr. Rishel’s memo states:

A purchase requisition has been sent to Purchas-

ing to contract Law Engineering to make Proctor

Tests and Field Density Tests to assure that 3000

5 Mr. Cullinan’s testimony also makes it clear that what Carbide

wanted from Law was assurance the the excavation was performed

properly and the backfill compacted properly to achieve 3000 psf bear-

ing capacity. Carbide was not looking to Law to determine whether slag

was a “suitable” fill material for the oxygen plant.

psf bearing capacity required by Union Carbide is

attained. (emphasis added).

This consistent course of conduct, from start to fin-

ish, makes it abundantly clear that in all of its dealings

with Law, GSC intended to and actually did act on behalf

of UCC, and UCC intended to and did control the manner

and method by which GSC had the proposed site investi-

gated and the construction work tested. That establishes

an agency relationship.

At the very least, it compels the conclusion that a

finding of agency by the District Court is “plausible in

light of the record viewed in its entirety,” and therefore

“cannot be clearly erroneous.” Anderson v. City of

Bessemer City, 470 U.S. at 574.

D. Conclusion.

The decision of the Court of Appeals repeatedly vio-

lates the Anderson v. City of Bessemer City standard, by

conducting a de novo evaluation of the evidence and

substituting its evaluation of the evidence for that of the

District Court. There is substantial credible evidence in

the record to support the findings of the District Court.

Where the evidence was conflicting, the District Court

explained how and why it resolved the conflict. The Dis-

trict Court’s findings with respect to Law’s negligence and

breach of warranty, GSC’s contributory negligence, and

GSC’s status as agent for UCC are plausible in light of the

record viewed in its entirety, and therefore cannot be

“clearly erroneous.”

To protect the integrity of the District Court’s role in

the factfinding process, this Court should grant the peti-

tion for certiorari, review the decision of the Court of Ap-

peals, and reverse that decision. Failure by this Court to

exercise its supervisory power in such a clear and com-

pelling case would allow the “clearly erroneous” standard

of Rule 52(a) to become an elastic rule, stretched and ap-

plied by each appellate court according to its own subjec-

tive view of whether a District Court’s findings of fact are

“correct.” A trial on the merits will then be in danger of

becoming a “tryout on the road,” rather than “the main

event.” See, Anderson v. City of Bessemer City,

470 U.S. at 575.

Georce D. Wenick

(Counsel of Record)

Rosert O. FLEMING, JR.

SMITH & FLEMING

2300 Peachtree Center Tower

230 Peachtree Street, N.W.

Atlanta, Georgia 30303-1505

Counsel for Petitioner

April 30, 1990

APPENDIX

Appendix A

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

No. 88-2884

GEORGETOWN STEEL CORPORATION

Plaintiff - Appellant

versus

UNION CARBIDE CORPORATION

Defendant - Appellant

LAW ENGINEERING TESTING COMPANY;

PITTSBURGH TESTING LABORATORY, INC.

Defendants - Appellees

No. 88-2979

GEORGETOWN STEEL CORPORATION

Plaintiff - Appellant

versus

UNION CARBIDE CORPORATION

Defendant - Appellant

LAW ENGINEERING TESTING COMPANY;

PITTSBURGH TESTING LABORATORY, INC.

Defendants - Appellees

Appeals from the United States District Court for the Dis-

trict of South Carolina, at Charleston. Falcon B. Hawkins,

District Judge. (CA-85-440-2-1)

Argued: June 5, 1989 Decided: December 15, 1989

Before WIDENER and HALL, Circuit Judges, and AN-

DERSON, United States District Judge for the District of

South Carolina, sitting by designation.

Charles Porter (E. Russeil Jeter, Jr., James B. Moore, Jr.,

MCNAIR LAW FIRM, P.A., on brief); Thomas S. Tisdale,

Jr. (Stephen P. Groves, YOUNG, CLEMENT, RIVERS &

TISDALE, on brief) for Appellants. Robert Bruce Wedge

(STOKES, SHAPIRO, FUSSELL & WEDGE, on brief);

Robert O’Neal Fleming, Jr. (SMITH & FLEMING, on brief)

for Appellees.

PER CURIAM:

This diversity case arises out of Georgetown Steel

Corporation’s (“GSC”) use of steel slag as backfill under a

railroad track scale, a truck scale, a refractory warehouse,

and an oxygen separation plant, all of which are located

on GSC’s steel mill site in Georgetown, South Carolina.

Shortly after swelling slag destroyed the oxygen separa-

tion plant which was owned and operated by Union Car-

bide Corporation (“Carbide”), GSC filed suit against Pitts-

burgh Testing Laboratory, Inc. (“PTL”) and Law Engineer-

ing Testing Company (“Law”) alleging negligence and

breach of express and implied warranties on the part of

PTL and Law in connection with their opinions regarding

the suitability of slag as fill material. GSC also filed suit

against Carbide for declaratory judgment to determine the

respective rights and responsibilities of GSC and Carbide.

Carbide cross-claimed against Law and PTL and counter-

claimed against GSC. The court allowed GSC to recover

for the damage to the track scale as a result of PTL’s negli-

gence but denied GSC’s remaining claims against both

PTL and Law. The court denied all of Carbide’s claims.

GSC and Carbide appeal. For the reasons set forth below,

we affirm in part and reverse in part and remand.

A rather complex set of facts gave rise to this lawsuit.

In 1979, Stephen Rishel, a civil engineer, was hired by

GSC. His job required him to perform the civil engineer-

ing necessary for all of GSC’s construction projects. His

duties included some engineering design, the writing of

specifications, preparation of drawings and the supervi-

sion of construction contractors. Prior to going to work at

GSC, Rishel worked as a construction engineer for a

highway contractor in the Pittsburgh area. He had some

experience with steel slag, having encountered it on at

least two construction jobs and having seen it used be-

hind retaining walls, as a base to support pavement, as

backfill underneath drain pipe, and behind bridge abut-

ments. In addition, he knew something of the expansive

properties of certain slag having heard from a carpenter

foreman on one of his construction jobs that a swimming

pool under which steel slag had been placed was destroyed

when the slag swelled.

Shortly after starting work at GSC, Rishel considered

using GSC’s steel slag as backfill as a cost saving measure.'

Because of his knowledge that certain slag does swell,

Rishel obtained approval from his supervisor, Bill Dobin-

ski, to have the slag tested for its expansive properties.

When he decided to have the slag tested, Rishel was not

aware of any expansive characteristic of the particular slag

produced by GSC nor was he aware that GSC frequently

had its slag chemically analyzed and had been doing so

since 1977.? Rishel contacted PTL and requested that cer-

1 GSC manufactures wire rod by melting scrap metal and iron in an

electric arc furnace. A by-product of the manufacturing process is a

steel slag. GSC has large piles of slag available and constantly creates

more.

2In February 1977, GSC entered into a contract with R. B. Pond Con-

struction Company, Inc. for the sale of GSC’s entire output of steel slag

to Pond for a five-year period. Prior to entering into the contract, Pond

had conversations with Owen Gochenaur, then president of GSC in

which Gochenaur told him that GSC’s slag was not used in the produc-

tion of concrete because it swelled. Doug Lane of IMS, the company

hired by GSC to process the steel slag, also informed Pond that the slag

produced at GSC swelled. GSC periodically provided Pond with chemi-

cal analyses of the slag, none of which revealed a calcium oxide con-

tain tests be run on the slag to determine its expansive-

ness. An employee of PTL, Greg Kuske, conducted several

tests on a slag sample including a swell test, under the di-

rection of Dr. Harry Wu, who was totally unfamiliar with

slag and its expansive nature. After the ninety-six hours

of testing required by the American Society of Testing Ma-

terials, the percentage of swell was found to be .09%.

Although Rishel had not asked PTL to determine

whether the slag would be appropriate for use as backfill

under any particular structures, on March 27, 1979, PTL is-

sued a report with the following conclusion:

Based on our tests results, the subject material is

a well-graded, course-grained, greenish gray mill

slag. The material has a very little effect on swell

due to change in its moisture content. This ma-

terial may be suitable for using as an engineered

fill, provided that the material should be com-

pacted to a minimum of 95% maximum density

as obtained by Modified Proctor ASTM D-1557.

On the basis of this report, Rishel made the decision to

use the slag for fill. His receipt of this report was the last

contact Rishel or anyone else at GSC had with PTL until

after problems with the slag backfill under the oxygen

separation plant surfaced in 1982.

tent of less than 40 percent. Bill King, the director of purchasing at

GSC, received at least one of the analyses in 1977. It revealed that the

slag contained 41.6 percent calcium oxide and 5.3 percent magnesium

oxide. It is undisputed that calcium oxide causes rapid swelling and

that magnesium oxide causes long-term swelling.

After he received the PTL report, Rishel used slag as

backfill around the walls of a railroad track scale. A track

scale contains the weighing mechanism for railroad cars,

and is a concrete structure the size of a railroad car, sitting

in the ground. Piles were placed under the scales, but slag

was used to backfill around the walls of the structure.

Shortly after its construction, problems developed with

the track scale when the walls deflected inward and

bound the weighing deck. Rishel testified that he did not

suspect expanding slag as the problem at this point. The

scale was repaired by its builder, Colt Industries, by placing

jacks in the walls for structural support. Heavy truck traf-

fic was also eliminated from the scales at the builder’s

suggestion. In September 1984, GSC had the slag replaced

with gravel at a cost of $3,233.

In early 1980 slag was used as backfill to support the

walls of a truck scale which was being installed on GSC’s

site. A truck scale resembles a track scale but weighs trucks

instead of railroad cars. When problems developed with

the pavement around the scale, it was moved to another

location on the GSC site and a material other than slag

was used as backfill because it was more convenient.

In the fall of 1980 slag was used as backfill under an

extension built on to an existing refractory warehouse.

Approximately a year later, GSC became aware of cracks in

the floor of the refractory warehouse extension and at-

tempted to repair the cracks by filling them with grout.

The cracks reopened within a year. Rishel testified it was

at this point, in the fall of 1982, that he first suspected that

there might be a problem with the slag fill.

Three years earlier, in the fall of 1979, Rishel had

learned that GSC and Carbide were negotiating for the

construction of an oxygen separation plant on the GSC

plant site. The plant’s purpose was to provide GSC with

oxygen and nitrogen in gaseous form at a price less than

that at which GSC previously purchased the gases. Under

an agreement entered into by Carbide and GSC on January

23, 1981, GSC agreed to provide a site for Carb:de to build

the plant, have an analysis of the soil conducted, and

perform the necessary preparation of the site for con-

struction. Preparation of the site involved two key ele-

ments. First, because the site was in close proximity to a

river, proper support for the plant had to be determined.

Second, because of the plant’s structure and the sensitive

nature of its equipment, Carbide would be abie to tolerate

only minimal differential settlement of the underlying

support.

GSC contacted Law about providing professional

engineering advice and testing services to assist in prepa-

ration of the site. On February 8, 1980, Law submitted a

proposal to conduct a geotechnical exploration of the

plant site, specifically, to provide “a general subsurface

exploration to determine one or two reasonable solutions

to major foundation and earthwork design and construc-

tion problems.” On February 12, 1980, GSC and Law en-

tered into a contract which provided that Law would

furnish all labor, equipment, supervision, materials,

tools, engineering, insurance, etc., “necessary to perform a

subsurface investigation within the proposed construc-

tion area for Georgetown’s New Oxygen plant,” and

would “analyze [sic] the conditions encountered to de-

termine any solutions to major foundation and earth-

work design problems and submit a written report with

these findings to Georgetown.”

Pursuant to this contract, and after conducting an

exploration of the plant location and performing various

soil tests, Law issued a report on March 24, 1980. Stated in

the report the purpose of the exploration was “to develop

information about the site [for the oxygen separation

plant] and subsurface conditions that could be used for

assessing foundation alternatives for the new facilities.”

Law’s investigation revealed that the area had been built

up to its current elevations using a fill consisting of slag

from the furnace operations at GSC. The fill contained

soil, metal, concrete, and both organic and inorganic de-

bris. Law made three alternative recommendations for

site preparation: (1) dynamic compaction of the existing

slag and sand fill to eliminate voids; (2) excavation of the

soil/slag mixture and replacement with properly com-

pacted sand; and (3) placement of the plant on properly

driven piles. GSC had originally requested that Law eval-

uate the possible use of piles. The third alternative was of-

fered in response to GSC’s request even though Law

noted that shallow foundations would be adequate to

carry the loads involved, assuming proper site prepara-

tion. As to shallow foundations, a section in the report

_ stated:

In our opinion, mat-type foundations bearing

on slag fill or new fill of silty sand (properly im-

proved as outlined in the following section)

could be used for the support of the proposed fa-

cility.

There is a greater degree of risk associated with

foundations bearing in the slag fill rather than

in virgin sands or sandy fill (used to replace the

slag fill) since it is possible that voids and varia-

tions could exist in the slag fill, which may not

be detected in site preparation procedures. This

higher degree of risk may be reduced somewhat

by the procedures outlined in the Site Prepara-

tion section. The acceptable risk level for this fa-

cility must be determined by Georgetown Steel

and considered along with the cost of replacing

the slag fill with properly compacted sandy fill

or the cost of deep foundations. If the risk asso-

ciated with placing foundations in the slag fill is

deemed unacceptable, then replacement of the

slag fill with properly compacted sand fill

should be less expensive than deep foundations.

After receiving this report Carbide officials had sev-

eral conversations with Stephen Blevins, chief soils engi-

neer at Law, and reiterated the fact that the proposed piant

could tolerate only minimal differential settlement due to

the movement-sensitive nature of its equipment. In light

of Carbide’s concerns and to deal with the intolerance of

differential settlement, Law clarified its recommendations

in a second report on August 29, 1980, and recommended

removal of the soil/slag/organic material in place and

replacement with properly compacted clean sand backfill.

On September 5, 1980, after receiving Law’s second report,

Rishel contacted Blevins and asked about the possibility

of replacing the soil/slag/organic material with pure slag

instead of clean sand, a move that would result in sub-

stantial savings to GSC ($1.40 per cubic yard). Rishel in-

formed Blevins that the slag contained lime and heavy

metals and at Blevins’ request gave him the results of

PTL’s grain-size analysis, but did not tell him of his

knowledge that certain types of siag swelled and were

inappropriate for use as backfil!* At this point, Blevins

had no knowledge that certain types of slag were expan-

sive. He approved the substitution of slag with confirma-

tion of its gradation.‘

During this same conversation, Rishel asked Blevins

to prepare a proposal for Law to oversee the site prepara-

tion project. Law subsequently submitted a proposal

which GSC accepted. It provided that Law would furnish

engineers to observe the excavation and backfill replace-

ment and would periodically conduct field density tests to

insure that the material was being properly compacted.

The proposal also stated:

We understand from Mr. Rishel that the metal

slag material, a by-produ+t of the plants [sic] steel

production, can be processed locally into a well

graded artificial aggregate. With verification of

this gradation, we anticipate the processed’ ma-

terial will be suitable for use in the backfill re-

quired within the Oxygen Plant.

In October 1980, Fred Sharpe, a Law engineer, visited

the plant site and obtained samples both of GSC’s pure

3 Blevins testified that at some point Rishel told him that slag had been

successfully used as backfill at other plant locations.

* Confirmation of gradation involves a grain-size analysis, the purpose

of which is to determine if a material will compact below the water-

line. Silts will not compact below the waterline, so Blevins asked for

the grain-size analysis from Rishel because he was concerned about the

compactibility of the slag.

10a

slag and of the soil/slag mixture which was in place at the

site. During this visit, Rishel told Sharpe that GSC had

previously used backfill with favorable results. He gave

Sharpe a copy of the PTL report. Sharpe reviewed the re-

port within two days of receiving it and then contacted

Blevins who told Sharpe to confirm the gradation of the

slag. Sharpe told Blevins that PTL had performed a swell

test on the slag and although both pondered as to why the

test was done, neither knew the reason for the test or

asked anyone at GSC about it. So that Law could properly

oversee the preparation of the plant site, Rishel also for-

warded to Sharpe a copy of the site drawing and the site

preparation specifications which required that the backfill

material be compacted to a minimum of 95% maximum

density.

During construction of the plant, Law performed in-

spection and testing at the construction site as per the

proposal. That included observation of the excavation,

placement and compaction of fill, and testing of the in-

place density of the fill. On January 5, 1981, Law issued a

report briefly summarizing its activities and giving the

test results of two sieve analyses and two compaction

tests. After the report was issued, and at Carbide’s request,

Rishel asked Sharpe to include information about the de-

sign bearing pressure. Sharpe reissued the report on Jan-

uary 20, 1981, with the following paragraph:

Based on monitoring and approval of the exca-

vation to suitable materials, and subsequent

field density testing of structural fill, we recom-

mend that foundations bearing in the fill mate-

rial utilize a total maximum design bearing

pressure of 3000 pounds per square foot.

lla

Construction of the oxygen separation plant was

completed in September 1981. Problems developed at the

plant shortly thereafter. The problems were first noticed

in 1982 when expansive slag caused stress on the electric

cables and floor heaving caused tripping hazards. The

Carbide plant manager initially thought the problems

might be due to the foundations sinking, but he subse-

quently learned that the floor of the plant was rising.

In November 1982, Fred Sharpe suggested that Law

conduct tests to determine if the slag beneath the plant

was expansive and Carbide authorized those tests. Law

performed chemical analyses and an autoclave test on the

slag and on January 14, 1983, issued a report concluding

that the slag was indeed expansive: “[T]he laboratory tests

performed indicate a definite potential for expansion,

both short term and long term, of the soil/siag mixture

which supports the slab in question at the Union Carbide

Oxygen Plant.” Law’s specific findings showed that:

During the autoclave expansion test of samples

molded from the soil/slag mixture and portland

cement . . ., the samples exhibited severe crack-

ing and crumbling. The cracking and crumbling

indicate a high potential for expansion of the

soil/slag mixture when exposed to moisture

changes.

The chemical analyses of the soil/slag mixture

indicate a significant percentage by weight of fer-

ric oxide, calcium oxide and magnesium oxide.

The hydration of calcium oxide has been found

to cause short term expansion and the magne-

sium oxide is thought to cause long term expan-

sion during hydration. Also, the very significant

amount of ferric oxide (47.5%) could possibly

12a

lead to further expansion due to oxidation, car-

bonation or crystalline hydration.

In 1985 Carbide was forced to close the plant because

of problems arising from the unstable foundation. The

parties do not dispute that the problems at the oxygen

separation plant were caused by expansion of the slag be-

neath the plant.

GSC subsequently filed suit against PTL, Law, and

Carbide for damages resulting from the slag swell. Against

PTL and Law, GSC alleged breach of express warranty,

breach of implied warranty, and negligence. As to Carbide,

GSC sought a declaratory judgment pursuant to 28 U.S.C.

§ 2201 that GSC had no duty to Carbide for the damage to

its air separation plant under the January 23, 1981, con-

tract entered into between the parties. Carbide cross-

claimed against Law and PTL and counterclaimed against

GSC. Prior to trial, Carbide settled its claims against GSC

and assigned GSC its claims against PTL and Law, which

claims remained separate from GSC’s claims.

Following a bench trial, the court found that PTL was

negligent in approving the use of steel slag as backfill but

that GSC could recover only for the cost of replacement of

the slag at the track scale because of its own contributory

negligence in continuing to use slag as backfill after the

problems at the track scale. The court also found PTL li-

able to GSC for breach of implied warranty, but denied

damages finding that it was not foreseeable that the slag

would be placed under any particular structure. The court

found that there was no express warranty from PTL to

GSC. The court denied GSC’s negligence and express and

implied warranty claims against Law on grounds that the

13a

expansiveness of the slag did not fall within the scope of

Law’s duties under the proposals. Finally, the court de-

nied all of Carbide’s claims against Law on the theory that

GSC was Carbide’s agent, and therefore, Carbide’s rights

were governed by the same result reached on GSC. GSC

and Carbide appeal.

Il.

GSC’s first contention on appeal is that the district

court erred in finding GSC contributorily negligent. GSC

also contends that the court erred in finding that the costs

of repairing the warehouse extension and the oxygen sep-

aration plant were not recoverable from PTL for breach of

implied warranty. Finally, GSC argues that the court erred

in holding that Law was not liable for negligence or for

breach of implied or express warranty. Carbide argues that

the court erred in finding that Carbide was not a foresee-

able victim of PTL’s negligence and therefore could not

recover for that negligence. Carbide also argues that the

court erred in finding that GSC was Carbide’s agent for

purposes of dealing with Law and that because GSC was

not entitled to recover against Law, neither was Carbide.

We address these issues seriatim.

The district court found that PTL was negligent when

it rendered an opinion that the slag it tested for GSC “may

be suitable for using as an engineered fill,” when by its

own admission PTL gave this opinion without conduct-

ing a full-scale soil investigation and with knowledge of

the expansive qualities of electric arc slag. The finding of

5In 1979, when PTL wrote the report at issue here, its Jacksonville,

Florida office had a library that contained a professional article entitled

14a

negligence on the part of PTL is not disputed on appeal.

What is disputed is the court’s finding that GSC could

only recover for PTL’s negligence with regard to the track

scale because of its own contributory negligence with re-

gard to the remaining structures.

The court based the finding of contributory negli-

gence on the fact that GSC failed to have the slag tested

further after the problems with the track scale developed

and went on to use slag as backfill around three other

structures, even though Rishel was aware of the potential

for swell in steel slag and GSC knew its slag swelled, fre-

quently had it chemically analyzed, and had done so since

1977. Under the circumstances, the district court found it

“incredulous” that no one at GSC suspected slag swell as

the cause when the problems at the track scale developed.

The court allowed GSC to recover for damage to the track

scale, $3,233, but denied recovery for damage to the other

structures.

In South Carolina, contributory negligence of the

plaintiff is a complete bar to recovery on a negligence

claim. South Carolina Insurance Co. v. James C. Greene

and Co., 290 S.C. 171, 348 S.E.2d 617 (1986). Contributory

negligence is defined as

“Building Damage from Expansive Steel Slag Backfill.” In addition,

Jack Roseman, manager of PTL’s geotechnical department, testified

that he knew in 1979 that electric arc furnace slag could swell, and in-

cluded a statement in all of his geotechnical soil reports warning

against the use of this type of slag as backfill.

‘15a

a lack of ordinary care on the part of a person

injured by the negligence of another which

combines and concurs with that other’s negli-

gence and contributes to the injury as a proxi-

mate cause without which injury would not

have occurred.

Id. at 177, 348 S.E.2d at 620.

The question before us is whether, under this stan-

dard, the district court’s finding that GSC was contributo-

rily negligent was clearly erroneous. Evidence at trial

showed that in 1977 GSC’s president, Owen Gochenaur,

knew that GSC’s slag contained chemical properties that

caused it to swell. Although Gochenaur left GSC in 1978,

Bill King, the director of purchasing, remained an em-

ployee for some time and he also knew about the swelling

properties of the slag. Further, although Steven Rishel,

the civil engineer in charge of GSC’s construction projects,

testified that he did not suspect that slag swell was the

problem with the various structures until 1982, and

therefore took no action to determine whether the slag

was expansive, he knew in 1979 that certain slag swelled.

Under the circumstances, Rishel should have been on

notice that the slag may have been swelling. There was

testimony that a reasonably prudent civil engineer with

Rishel’s background and knowledge should have sus-

pected slag swell as the problem with the track scale, and

should have, at that point, had the slag tested again, to de-

termine if it was causing the problem at the track scale.

On the basis of this evidence and that which indicated

that GSC itself had knowledge that its slag had expansive

qualities, we cannot say that the district court’s finding

that GSC was contributorily negligent was clearly erro-

l6a

——_———

neous. Instead, it is supported by the evidence and must

be affirmed.

GSC next contends that the district court erred when

it found that PTL had breached its implied warranty to

GSC, but denied damages for the cost of repairing the

warehouse and the oxygen separation plant. The court

found that PTL was not liable for damages because, in

March 1979 when the PTL report was issued, neither party

contemplated that the refractory warehouse addition or

the oxygen separation plant would be built on the slag.

Had PTL known that the slag would be placed under a

multi-million dollar structure, the court found that it

may have conducted further tests, conducted literature

searches, and/or contacted other PTL offices to substanti-

ate its conclusion with regard to the steel slag.

In reaching its decision, the court relied on George-

town Towing Co. v. National Supply Co., 204 S.C. 445, 29

S.E.2d 765 (1944). There the plaintiff purchased a marine

engine from the defendant under a written contract of

sale. The plaintiff alleged that the contract required the

defendant to furnish a competent mechanic to supervise

the installation of the engine in plaintiff's boat. When the

engine broke down, the plaintiff sued alleging breach of

implied warranty in failing to properly install the engine.

The court found that defendant impliedly warranted the

proper installation of the engine and that defendant

breached that warranty. In addressing the issue of dam-

ages, the court said:

17a

In a case of this kind, the buyer may re-

cover, in addition to general damages, any spe-

cial or consequential damages which he may

have suffered by reason of breach of warranty,

and which are the natural and direct or proxi-

mate result of the breach, and may reasonably be

considered as within the contemplation of the

parties at the time the contract was made.

29 S.E.2d at 767 (citations omitted). The court allowed the

plaintiff to recover the cost of repairing the engine and

damages for loss of business during the time the boat was

laid up for repairs, finding that the defendant was aware

that the engine was purchased to enable plaintiff to con-

duct its business. The district court in this case relied

upon the language in Georgetown Towing in finding that

GSC could not recover for damage to the warehouse ad-

dition and the oxygen separation plant because neither

structure was within the contemplation of the parties

when the implied warranty arose.

Appellants argue that the cost of repairing the ware-

house extension and the oxygen separation plant comes

within the category of general damages and as such, their

recovery does not depend upon whether the structures

were within the contemplation of the parties. We dis-

agree. In Sheek v. Lee, 289 S.C. 327, 345 S.E.2d 496 (1986),

the South Carolina court distinguished between general

and special damages. “General damages are those which

must necessarily result from the wrongful act upon

which liability is based,” 345 S.E.2d at 497. “Damages for

losses that are the natural and proximate, but not the nec-

essary, result of the injury may be recovered only when

such special damages are sufficiently stated and claimed.”

18a

—— rc ce

Id. Damages for the cost of repair of a multi-million dollar

structure can hardly said [sic] to be general damages that

necessarily resulted from PTL’s negligence. It is undis-

puted that GSC did not tell PTL anything about the pro-

posed construction of either the warehouse extension or

the oxygen separation plant when it engaged PTL’s ser-

vices to conduct the slag tests. The evidence on this point

is clear. Therefore, we conclude that the district court did

not err in finding that GSC was not entitled to recover for

the cost of repair to those structures their construction not

being within the contemplation of the parties either

when PTL was hired or when it issued its report. The dis-

trict court’s finding on this point is affirmed.

IV.

Next, GSC contends that the district court erred in

denying its negligence and breach of warranty claims

against Law for damages arising frorn destruction of the

oxygen separation plant. The district court found that Law

had no duty under its agreements with GSC to determine

whether the slag was expansive and therefore was not

negligent in failing to conduct a literature search, failing

to test the slag for expansiveness, or failing to inform GSC

of its knowledge that slag swelled. In addition, the court

found that GSC was contributorily negligent in not telling

Law of the problems at the track scale and in telling Law

that GSC had used slag successfully and without incident

in the past. The court found GSC’s contributory negli-

gence a proximate cause of the damage to the plant, for

had Law been put on notice that the slag had caused

problems in the past or that slag had been placed around

the walls of the track scale and problems later developed,

19a

it could have investigated the properties of the slag more

thoroughly.*

After thoroughly reviewing the evidence in this case,

we conclude that the district court’s finding that Law was

not negligent in approving the use of slag as backfill un-

der the oxygen separation plant is clearly erroneous. The

court found that it was not part of Law’s duties to test for

expansiveness of the slag. We recognize that there is no

express language in any agreement or proposal in the

record that specifically required Law to test for expansive-

ness of the slag. However, Law was asked to give an ex-

pert opinion on the type of foundation necessary to sup-

port the oxygen separation plant and in doing so it specifi-

cally approved the use of GSC’s slag to support the foun-

dations. In its March 24, 1980, report Law set out three al-

ternative recommendations for site preparation. One of

those recommendations was to place the plant on the ex-

isting slag and sand fill after dynamic compaction. The

report stated about the recommendations: “The enclosed

guideline recommendations for foundation design repre-

sent foundation approaches which we feel would be ap-

propriate.”

Subsequently, in response to a question from GSC,

Law approved the use of pure slag as backfill. On Septem-

ber 9, 1980, Law wrote that “[wlith verification of... gra-

dation, we anticipate the processed material will be suit-

® The evidence showed that Law, like PTL, had a copy of the article

“Building Damage from Expansive Steel Slag Backfill.” The article was

in Law’s Atlanta, Georgia office. The report to GSC was issued out of

Law’s Birmingham, Alabama office.

20a

able for use in the backfill required within the Oxygen

Plant.” As a professional geotechnical and materials engi-

neering company, hired for its expertise in the field, Law

was Clearly negligent in approving the use of GSC’s slag as

appropriate backfill material, especially in view of

Stephen Blevins’ admission that he was not qualified by

experience or training to deal with slag, that he knew

nothing about the expansive properties of slag, and that

he had no prior experience with the use of slag. Further

evidence of Law’s negligence is seen from the testimony

of Paul Gooding who, as an employee of Law from 1968 to

1986, testified as Law’s corporate representative. Gooding

testified that he and probably all other geotechnical engi-

neers employed in Law’s Birmingham office knew in the

early 1970’s that slag had expansive qualities and that it

could cause problems if used as backfill material.

The district court found that it was reasonable for

Law to rely upon Rishel’s statements that slag had been

used in the past as backfill at GSC and not to pursue the

expansiveness issue because of these statements. We can-

not agree. Law’s corporate knowledge of the expansive

qualities of slag, coupled with Stephen Blevins’ lack of

familiarity with the material, should have put Law on

notice that before it rendered an opinion that slag was

suitable for backfill under a multi-million dollar plant, it

should have inquired further. It is undisputed that Law

knew exactly what structure was going to be built and that

the construction of the foundation of that structure was

going to be based on its recommendation. An opinion

that the slag was suitable as backfill inherently and neces-

sarily included a finding that the slag would not swell and

destroy the plant. Under these circumstances, it is clear

21a

that Law was negligent in approving the slag as backfill

without testing it for expansiveness.

The district court also found that GSC was contribu-

torily negligent in failing to inform Law that there had

been a problem at the track scale and in informing Law

that slag had been used successfully in the past. We do not

believe these facts support a finding of contributory negli-

gence. Although making and omitting to make such

statements was negligent, GSC’s conduct was not con- '

tributorily negligent so as to bar recovery because it did

not contribute “to the injury as a proximate cause without

which injury would not have occurred.” South Carolina

Insurance Co. v. James C. Greene and Co., 290 S.C. 171, 348

S.E.2d 617 (1986). The proximate cause of the destruction

of the plant was Law’s opinion that the oxygen separation

plant could be built on foundations placed in slag.

The district court denied GSC’s warranty claims

against Law for the same reason that it denied its negli-

gence claim, i.e., that Law had no duty to determine

whether t!.e slag was expansive. The court found that the

only warranty running from Law to GSC was defined by

the relevant contract documents. In those documents Law

warranted that it would perform its tasks with that degree

of skill and care exercised by engineers practicing in the

locality. The issue is whether Law breached that warranty

when it rendered its opinion that slag would be suitable

backfill for the foundation of the oxygen separation plant.

Having concluded that Law was negligent because its du-

ties included the determination of the expansiveness of

the slag and it failed to make that determination, we must

also reverse the district court on this point. Law clearly

22a

—————

breached its warranty when it approved the use of slag

under the oxygen separation plant without first testing its

suitability.

Carbide contends that the district court erred in hold-

ing that it could not recover for PTL’s negligence. The

court denied recovery finding that PTL owed no duty to

Carbide because it was not foreseeable that Carbide would

rely on PTL’s report and suffer damages as a result of that

reliance. Carbide argues that it was foreseeable to PTL that

some structure would be built on the slag fill; the fact that

Carbide built the structure instead of GSC does not obviate

PTL’s duty to perform without negligence.

In South Carolina, a cause of action for negligence

requires: (1) the existence of a duty on the part of the de-

fendant to protect the plaintiff; (2) the failure of the de-

fendant to discharge the duty; and (3) injury to the plain-

tiff resulting from the defendant’s failure to perform.

South Carolina State Ports Authority v. Booz-Allen &

Hamilton, Inc., 289 S.C. 373, 346 S.E.2d 324 (1986) . The ab-

sence of any one of these elements renders the cause of

action insufficient.

Foreseeability of injury, in the absence of a duty to

prevent the injury, is an insufficient basis upon which to

rest liability. Tolar Construction Company v. GAF Corpo-

ration, 154 Ga. App. 127, 267 S.E.2d 635, rev’d on other

grounds, 246 Ga. 411, 271 S.E.2d 811 (1980). Foreseeability

itself does not give rise to a legal duty.’ A tortfeasor’s duty

arises from his relationship to the injured party. This re-

lationship may arise out of the tortfeasor’s contractual

relationship with a third party. Barker v. Sauls, 289 S.C.

121, 345 S.E.2d 244 (1986). This is exactly the argument

Carbide makes, i.e., that out of its relationship with GSC,

who had a contractual relationship with PTL, arose a rela-

tionship between Carbide and PTL.

In South Carolina State Ports Authority v. Booz-

Allen & Hamilton, Inc., 289 S.C. 373, 346 S.E.2d 324 (1986),

the South Carolina court recognized that liability for neg-

ligence in preparing reports has, in certain circumstances,

been extended to parties other than those to the contract

and that consultants may be found liable in negligence to

non-contracting parties who have reasonably relied on

their reports in taking some action. In that case the Geor-

gia-Ports Authority contracted with Booz-Allen & Hamil-

ton, a consulting firm, to prepare a report comparing the

merits of the Savannah port with the Charleston port for

commercial traffic. The report was highly favorable to the

Savannah port and contained false facts and figures con-

cerning the Charleston port. Distribution of the report by

the Georgia Ports Authority to domestic and foreign cus-

tomers and potential customers resulted in decreased

traffic in the Charleston port. The South Carolina State

Ports Authority, the Pilots Association, and two local

” A legal duty is that which the law requires to be done or forborne

with respect to a particular individual or the public at large. S.C.E. & G.

v. Utilities Construction Company, 244 S.C. 79, 135 S.E.2d 613 (1964).

24a

chapters of the Longshoremen’s Association sued Booz-

Allen & Hamilton for negligence.

The South Carolina court held that Booz-Allen &

Hamilton owed a duty to the South Carolina State Ports

Authority to exercise due care to accurately report objec-

tive factual data concerning the Charleston port, if it

knew or should have known the report was intended to

be used by Georgia Ports Authority as a marketing device.

We hold a duty to use due care, running from a

consultant to the commercial competitor who is

being critiqued, arises when the consultant un-

dertakes to objectively analyze and compare the

attributes of commercial competitors for the

purpose of giving one a market advantage over

the other.

345 S.E.2d at 326.

However, the court found no duty owed by Booz-

Allen & Hamilton to individuals who relied upon the

shipping traffic in the Charleston port for commercial

profit. The court found this relationship far too attenu-

ated to rise to the level of a duty flowing between them.

“The concept of duty in tort liability must not be extended

beyond reasonable limits.” 346 S.E.2d at 326 (citation omit-

ted).

Application of the principles of Booz-Allen &

Hamilton to the facts of this case mandates that Carbide’s

claim be denied. There is absolutely no evidence that PTL

knew or should have known that GSC was going to enter

into a contract with Carbide and that under that contract

Carbide would build a multi-million dollar oxygen prepa-

25a

ration plant on top of slag fill, relying on PTL’s report that

slag was appropriate backfill. Nor is there evidence that

Carbide relied on PTL’s report or even that anyone at GSC

informed Carbide of the existence of the report. To extend

PTL’s duty to Carbide under these circumstances would in

our opinion be to extend it beyond reasonable limits. We

therefore affirm the district court’s denial of Carbide’s

negligence claim against PTL.

VI.

Finally, Carbide contends that the district court erred

in denying its claims against Law for negligence and

breach of warranty on the theory that an agency relation-

ship existed between GSC and Carbide thus binding Car-

bide, the principal, to the same result as that reached by

the court as to GSC, the agent. We agree.

Agency is a fiduciary relationship that depends ini-

tially on intent. 3 AM. JUR.2d Agency § 17 (1986). “Before

an agency relationship can exist, the principal must in-

tend that the agent shall act for him, ana the agent must

intend to accept the authority and act on it, and the in-

tention of the parties must find expression either in

words or conduct between them.” Courtney v. Remler,

566 F. Supp. 1225, 1230 (D.S.C. 1983). However, under

South Carolina law an agency relationship does not re-

quire an express agreement to that effect between the par-

ties, but may be implied or inferred from the words and

conduct of the parties. Bankers Trust of South Carolina v.

Bruce, 323 S.E.2d 523 (S.C. Ct. App. 1984). The existence of

an agency, nonetheless, must be clearly established. Mc-

Call v. Finley, 294 S.C. 1, 362 S.E.2d 26 (1987). The corner-

stone of an agency relationship is the power of the prir.-1-

26a

pal to control the conduct of his agent. Sharpe v. Bradley

Lumber Co., 446 F.2d 152, 153 (4th Cir. 1971). This power to

control the means and methods employed by the agent,

and not just the result, distinguishes an agency relation-

ship from that of independent contractor. Fernander v.

Thigpen, 278 S.C. 140, 293 S.E.2d 424 (1982).

Applying these principles to the facts of the case be-

fore us, we conclude that there was no agency relation-

ship between GSC and Carbide and that the court’s finding

to the contrary is clearly erroneous.’ We do not find from

the facts of this case any evidence of intent on the part of

GSC to act as Carbide’s agent with Law, nor do we find

evidence of intent on the part of Carbide that GSC act on

its behalf and subject to its control.

The contract entered into by GSC and Carbide was an

armslength transaction. It obligated each party to under-

take and complete certain tasks. One of GSC’s duties un-

der the contract was to perform the necessary preparation

of the site for construction. To assist it in the site prepara-

tion, GSC hired Law. There is no evidence that Carbide

gave GSC consent to hire Law, controlled GSC’s conduct

in any manner, or that GSC intended to act in Carbide’s

behalf in entering into the agreement with Law. GSC was

clearly attempting to fulfill its responsibilities under its

8 As the district court noted, the determination of the existence of an

agency relationship is a question of fact and such is reviewed under the

clearly erroneous standard. Gathers v. Harris Teeter Supermarket, Inc.,

282 S.C. 220, 317 S.E.2d 748 (1984).

agreement with Carbide, not to conduct business on Car-

bide’s behalf .’

The district court found an agency relationship from

the facts that after receiving Law’s first report, Carbide of-

ficials contacted Law and reiterated that the plant could

tolerate only minimal differential settlement and that

after Law’s January 1981 report was issued, at Carbide’s re-

quest, Rishel asked Law to clarify its position on design

bearing pressure.

Neither of these instances evidence an agency rela-

tionship. Neither shows that Carbide had the right to con-

trol the conduct of GSC that is required for an agency to

exist. This evidence merely shows that Carbide was con-

cerned with the end result — that the plant site be prop-

erly prepared to support the oxygen separation plant as

required by its agreement with GSC.

Under the circumstances, we are of the view that the

court erred in finding an agency relationship and denying

Carbide’s claims against Law on the same basis that it de-

nied GSC’s claims.

9 Law makes much of the fact that the contract between GSC and Car-

bide was not entered into until after GSC had already hired Law to per-

form certain soil tests which Carbide required for proper site prepara-

tion. All this indicates is that prior to execution of the written contract,

GSC was aware from its discussions with Carbide that it was going to

have the task of site preparation for the plant and that GSC hired Law

to assist in that preparation. This fact does not establish an agency rela-

tionship.

28a

VII.

Accordingly, the judgment of the district court is af-

firmed in part, reversed in part, and remanded for pro-

ceedings consistent with this opinion including a deter-

mination of damages.

AFFIRMED IN PART;

REVERSED IN PART; and

REMANDED.

WIDENER, Circuit Judge, Concurring:

I concur in the result reached by Judge Hall’s opin-

ion.

ANDERSON, Joseph F., Jr., District Judge, Concurring in

Part and Dissenting in Part:

I concur with parts I, II, III, and V of the majority’s

decision. I am of the opinion, however, that the district

judge’s findings as to Law’s negligence and breach of war-

ranty, GSC’s contributory negligence, and GSC’s status as

an agent of Carbide were not clearly erroneous, because

they are “plausible in light of the record viewed in its en-

tirety.” Anderson v. City of Bessemer City, North

Carolina, 470 U.S. 564, 574 (1985). I therefore respectfully

dissent from parts IV and VI of the opinion. I would af-

firm the decision below in all respects.

29a

Appendix B

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF SOUTH CAROLINA

CHARLESTON DIVISION

GEORGETOWN STEEL CIVIL ACTION

CORPORATION, #2:85-0440-1

Plaintiff,

VS. ORDER

UNION CARBIDE CORPORATION,

LAW ENGINEERING TESTING

COMPANY, and PITTSBURGH

TESTING LABORATORY, INC.,

Defendants.

This case arises out of Georgetown Steel Corpora-

tion’s use of steel slag as backfill under a railroad track

scale, a truck scale, a refractory warehouse, and, most sig-

nificantly, an oxygen separation plant, all of which were

located on Georgetown Steel Corporation’s site in George-

town, South Carolina. The plaintiff filed suit against the

three defendants, seeking a declaratory judgment against

Union Carbide Corporation (UCC) and monetary damages

against Law Engineering Testing Company (Law) and

Pittsburgh Testing Laboratory, Inc. (PTL). UCC cross-

claimed against Law and PTL, and also filed a counter-

claim against Georgetown Steel Corporation (GSC).

30a

The case was tried before the court, sitting without a

jury, from April 5, 1988 to April 12, 1988. Just prior to trial,

UCC notified the court and the other defendants that it

and GSC had settled their differences. The settlement in-

cluded UCC’s assignment to GSC of all claims against Law

and PTL. The case proceeded with only GSC prosecuting

claims against Law and PTL.

During the trial of the case, many objections were

noted concerning the scope of the testimony of certain ex-

pert witnesses. The court postponed ruling on these objec-

tions and, after trial, instructed the parties to brief their

positions in reference to the scope of the experts’ testi-

mony. The court will rule on these objections in its Con-

clusions of Law, but has not considered any of the evi-

dence to which an objection will be sustained.

The court, having considered the testimony and the

exhibits admitted at trial and the proposed findings of fact

and conclusions of law submitted to the court after the

trial, makes the following Findings of Fact and Conclu-

sions of Law in accordance with Rule 52(a), Federal Rules

of Civil Procedure:

FINDINGS OF FACT

1. GSC is a Delaware corporation with its principal

place of business in Georgetown, South Carolina. Law is a

Georgia corporation with offices throughout the United

States, including an office in Charleston, South Carolina.

PTL is a division of Professional Service Industries, Inc.,

which is headquartered in Lombard, Illinois. In 1979, PTL

was a Pennsylvania corporation with its principle place of

business in Pittsburgh, Pennsylvania.

3la

2. Steel slag is a byproduct of the steel-making pro-

cess. It is a grayish-green material with the consistency of

crushed gravel or sand.

3. GSC manufactures wire rod, and the process in-

cludes melting scrap metal and iron in an electric arc fur-

nace. Different steel making processes produce steel slag

with differing characteristics. The GSC steelproducing

process results in a steel slag rich in caicium oxide and

magnesium oxide. When this slag is introduced to water,

the calcium oxide and the magnesium oxide hydrate and

cause the slag to swell. Calcium oxide causes rapid

swelling, and magnesium oxide causes long-term

swelling.

4. On or about February 9, 1977, R. B. Pond entered

into a contract with GSC on behalf of his company, R. B.

Pond Construction Company, Inc. The contract provided

that R. B. Pond Construction Company, Inc., which is in

the business of building and paving roads and producing

asphalt, would purchase GSC’s entire output of steel slag

for a period of five (5) years.

5. Prior to entering the 1977 contract, Pond had con-

versations with Owen Gochenaur, then president of GSC,

in which Gochenaur told him that the slag was not used

in the production of concrete because it swelled. Doug

Lane of IMS' also informed Pond that the slag produced at

1 IMS is the company hired by GSC to process the steel slag. The pro-

cessing involves removal of metals and crushing the slag into a usable

grain size.

GSC swelled and that it could be cured by exposing it to a

spray of water for a one (1) year period.

6. GSC periodically provided Pond with chemical

analyses of the steel slag none of which revealed a cal-

cium oxide content of less than forty (40%) percent.

7. Bill King, the director of purchasing at GSC, re-

ceived at least one of the chemical analyses in i977. The

analysis received by King revealed that the slag contained

forty-one and six-tenths (41.6%) percent calcium oxide

and five and three-tenths (5.3%) percent magnesium ox-

ide.

8. In February 1979, Steve Rishel began work at GSC.

Rishel received a Bachelor of Science degree in civil engi-

neering from the University of Pittsburgh in 1964 and is a

registered professional engineer in Pennsylvania, North

Carolina and South Carolina.

9. Prior to beginning work at GSC, Rishel worked in

the construction business mostly in the Pittsburgh area.

He had fairly extensive experience with steel slag, and had

encountered slag on at least two (2) projects in the Pitts-

burgh area. In addition, as a construction engineer for E. J.

Albrecht, he had seen slag used behind retaining walls, as

a base to support pavement, as backfill underneath

drainage pipe, and behind bridge abutments.

10. Skip Wolf was a carpenter on one of the jobs on

which Rishel had previously worked. He told Rishel of a

bad experience he had had placing slag underneath a

swimming pool. Wolf told Rishel that the slag un-

derneath the pool expanded and destroyed the pool.

33a

11. After arriving at GSC in 1979, Rishel wanted to

use the steel slag as backfill, so he decided to have it

tested. He testified that the purpose of having the slag

tested was to determine if it was expansive.

12. Rishel told his boss, Bill Dobinski, about his

knowledge of the expansiveness of slag? and about the

swimming pool incident, and he asked Dobinski if he

could obtain a report from PTL.

13. Rishel testified that he had no knowledge of any

previous testing of GSC’s slag. However, he also testified

that he never determined if anyone at GSC had any prior

knowledge of any tests run on GSC’s slag or any knowl-

edge of whether the slag expanded. Thus, Rishel was not

aware that the slag was frequently chemically analyzed,

nor was he aware of any expansive characteristic of the

particular slag produced by GSC.

14. At that time in early 1979, Lynn Clark of PTL was

working locally at a PTL field office. Rishel contacted

Clark and asked him about the slag. Clark said he had no

knowledge about slag and directed Rishel to PTL’s

Columbia, South Carolina, office.

15. On or about March 8, 1979, Rishel called PTL and

spoke with Charles Nicholson.

2 Throughout this order, the court will refer to an individual or a party

having knowledge that slag is expansive or that slag swells. Unless

otherwise specified, this reference means only that the individual or

party had previous experience with expansive slag, and does not mean

that the individual or party was aware that GSC’s slag swelled or of

which particular types of slag were expansive.

34a

16. Nicholson testified at the trial of this case. He cur-

rently lives in Chapin, South Carolina, and works as the

building superintendent at the First Baptist church in

Columbia. He attended high school and two (2) years of

college. He is not an engineer. He became the district

manager at PTL’s Columbia office in 1972, and was still in

that position when he spoke with Rishel on or about

March 8, 1979.

17. The parties hotly dispute the contents of the con-

versation between Rishel and Nicholson. Rishel admits

that he did not know to whom he spoke when he called

PTL in 1979 to inquire about having the slag tested. He

claims, however, that he called PTL’s office and told to

whomever he spoke that he wanted to use steel slag as

backfill, that he knew that steel slag occasionally swelled,

and that he wanted to have the GSC slag tested to deter-

mine if it was of the expansive variety and if it could be

appropriately used as backfill. He claims that in response

the person at PTL suggested four (4) tests, and that he sub-

sequently sent in a purchase requisition and received a

purchase order from GSC’s purchasing department au-

thorizing PTL to conduct these four (4) tests on the slag.

18. Nicholson claims, on the other hand, that he was

unfamiliar with steel slag and with the swell test which

was among the tests run by PTL. He admits that he has no

specific recollection of the conversation, but claims that

he could not have suggested the tests to Rishel because he

would not have known to do so. He also testified that it

was not normal procedure for him to suggest tests to

clients since he is not an engineer. Furthermore, Nichol-

son testified that if the conversation had taken place as

35a

Rishel suggests, the problem-solving nature of Rishel’s

request would have resulted in PTL’s billing GSC on an

hourly rate. There is no dispute that the bill for PTL’s

service was calculated on a per test basis and totalled four

hundred ($400) dollars.

19. The court finds that the conversation between

Rishel and Nicholson more closely resembled Nichol-

son’s version. The court bases this finding on the follow-

ing: (1) Rishel had previous experience in the road indus-

try, (2) the swell test is part of the California Bearing Ratio

test which determines the strength of materials to be

placed under roads, (3) Rishel had experience with swell

tests in school, (4) Nicholson was not an engineer and

knew nothing about swell tests, (5) of all of the persons

who testified, Nicholson was uniquely disinterested in

the outcome of the trial, and (6) PTL did not bill GSC on

an hourly rate, but billed on a per test rate consistent with

the scenario to which Nicholson testified.

Thus, the court finds that Rishel suggested the tests

to PTL to run and obtained a purchase order for the run-

ning of those particular tests. The court further finds that

Rishel did not ask PTL to solve the more general problem

of whether the slag was appropriate for use as backfill un-

der structures.’

3 Since the court reaches the above conclusion with respect to the

Rishel/Nicholson conversation, it need not address PTL’s contention

that Rishel was contributorily negligent in relying on Nicholson to

suggest the tests since Rishel knew nothing of Nicholson’s back-

ground.

36a

ial

20. The GSC purchase order calls for a “standard

proctor test, swell test, moisture and unit weight test on

slag sample.”

21. After receiving the GSC purchase order, a PTL

representative obtained samples of the GSC slag and sent

them to Columbia. Columbia in turn sent the slag to the

PTL office in Jacksonville, Florida, with instructions con-

cerning the tests to be run.

22. In 1979, Greg Kuske was a technician in PTL’s

Jacksonville office. He conducted the required tests under

the supervision of Dr. Harry Wu, who obtained a Ph.D. in

geotechnical engineering from the University of Ken-

tucky in 1976.

23. Dr. Wu had never before encountered slag and

knew nothing of the expansive nature of slag.

24. Dr. Wu reiterated in his testimony that he was

only to conduct tests requested by GSC and was not to

conduct a full-scale soil investigation.

25. Under the direction of Dr. Wu, Kuske performed

four (4) tests on the steel slag from the IMS stockpile at

GSC. The tests included a moisture content determina-

tion, grain-size analysis, proctor density test, and a swell

test.

26. The grain-size analysis involves pouring the

material tested through a series of graduated sieves to

determine its grain size. The proctor test determines the

optimal moisture content and the maximum dry density.

These two tests generally relate to the compactability of

37a

the material and are apparently not relevant to determin-

ing sweil potential.

27. The swell test is part of the California Bearing

Ratio (CBR) test. The CBR test is used in the construction

of roads to determine the strength of materials to be used

under pavement. The swell test was conducted by PTL in

accordance with the American Society for Testing Mate-

rials (ASTM) standard D-1883. ASTM D-1883 requires that

the swell test be conducted for ninety-six (96) hours.

28. After ninety-six (96) hours of testing, a slag sam-

ple‘ with an original height of four and fifty-eight/100ths

(4.58”) inches swelled four/1,000ths (.004”) of an inch. The

percentage of the swell was nine/100ths (.09%) percent.

29. The device which measures swell is accurate to

between five/10,000ths (.0005”) of an inch and

one/1,000th (.0001”) [sic] of an inch.

30. The sample was measured for swell at the follow-

ing intervals: one (1) hour, two (2) hours, four (4) hours,

twenty-four (24) hours, forty-eight (48) hours, seventy-two

(72) hours, and ninety-six (96) hours. These various mea-

surements indicated that approximately two-thirds (2/3)

of the total swell occurred during the final twenty-four

(24) hours of testing.

31. On or about March 27, 1979, and after conducting

these tests, PTL issued a report authored by Dr. Wu and

* Actually, three samples of slag were tested. The results discussed

herein represent roughly the average of the calculations with respect to

the three samples.

38a

aa ate

reviewed and approved by Charles Moore, who at that

time managed PTL’s Jacksonville office.

32. The report issued by PTL described the test results

and then, unfortunately, contained a section captioned

“Conclusions.” This section read in its entirety:

Based on our test results, the subject material is

a well-graded, coarse-grained, greenish gray mill

slag. The material has a very little effect on swell

due to change in its moisture content. This ma-

terial may be suitable for using as an engineered

fill, provided that the material should be com-

pacted to a minimum of 95% maximum density

as obtained by Modified Proctor ASTM D-1557.

The report is signed by Dr. Wu.

33. The court heard several definitions of the term

“engineered fill.” The description which most accurately

summarizes the various definitions and accurately de-

scribes engineered fill comes from the testimony of Jack

Roseman whom PTL designated as its corporate witness.

Roseman testified as follows in response to questions

propounded by GSC’s attorney, Alan Runyan:

Q. What is an engineered fill?

A. An engineered fill is a fill that is placed

in lifts of a predetermined thickness and com-

pacted by some means of compaction equipment

to a desired specified percentage of compaction.

Q. Then what?

A. As underlying lifts are achieved, the

specified compaction, the subsequent next lift is

placed, compacted, tested. Once the compaction

39a

is achieved, then it’s brought up to the desired

subgrade elevation.

Q. Does an engineered fill contemplate that

something is going to go on top of it that’s not

fill material?

A. Yes and no. Sometimes you can have a

structure or a pavement or a highway. Other

times it could be a ball field or a parking lot or

just a storage area, outside storage area, some-

thing like that.

Based on this testimony and the testimony of the other

engineers who testified at trial, the court finds that an

“engineered fill” is a material placed in lifts of predeter-

mined thickness and compacted to a predetermined den-

sity upon which may be placed structures or pavement.

34. Rishel received the PTL report and decided based

on this report that he could use the slag as engineered fill.

Rishel’s receipt of the PTL report was the last contact he or

anyone at GSC had with PTL until problems with the slag

backfill under the oxygen separation plant surfaced.

35. He first used the slag as backfill to support a track

scale. A track scale is a concrete structure, four (4’) feet

deep, with a weighing mechanism which weighs railroad

cars. Piles were placed under the scale, but slag was used

to backfill around the walls of the structure.

36. Very shortly after the construction of the track

scale, problems developed. More specifically, the walls of

the track scale deflected inward and bound the deck.

Rishel testified that he did not, at this point, suspect that

the problem was caused by expanding slag nor did he tell

40a

anyone involved with the construction or repair of the

track scale that he was aware that some slag expanded.

Jacks were placed in the walls to add structural support,

and the original slag backfill was removed and replaced

with more slag.

37. The repairs to the track scale were performed by

Colt Industries. David Valk, the service manager of Colt

Industries, indicated in a memorandum dated October 22,

1979, to S. Koehle, the Executive Vice President of GSC,

that the problem might be alleviated by GSC’s instigation

of procedures to eliminate Euclid’ traffic in the vicinity of

the track scales.

38. In September of 1984, GSC had the slag around

the track scale removed and replaced with gravel. The

cost of this repair was three thousand two hundred thirty-

three ($3,233.00) dollars.

39. The next project which involved slag was the in-

stallation of a truck scale in early 1980. This structure re-

sembles a track scale but weighs trucks instead of railroad

cars. Slag was placed as backfill to support the walls of this

structure also. Problems developed with the pavement

around the scale, and it was moved to another location at

the GSC plant. After relocation, a material other than slag

was used as backfill around the scale because it was more

convenient.

> A Euciid is a heavy truck with an open back which is used to carry

heavy loads.

4la

40. Slag was next placed as backfill under an exten-

sion built on to an existing refractory warehouse in the

fall of 1980. Rishel testified that, despite the prior prob-

lems, he still did not suspect that the slag was expansive,

and his lack of suspicion was based on the assurance of

the PTL report. At this point, he had not told anyone at

GSC other than Dobinski about his knowledge that siag

was expansive. It was not until September of 1981 that

Rishel became aware of cracking problems on the floor of

the refractory warehouse extension.

41. In the fall of 1979, Rishel first learned that GSC

and UCC were considering the construction of an oxygen

separation plant on the GSC plant site.

42. The steelmaking process requires a large quantity

of oxygen and nitrogen gas. In 1979, GSC purchased these

gases in liquid form and had them shipped to the GSC

plant. The purpose of the oxygen separation plant was to

provide GSC with oxygen and nitrogen in gaseous form at

a price less than the price at which GSC previously pur-

chased the gases. The oxygen separation plant distilled air

into its components and piped the oxygen and nitrogen

gases directly to the GSC plant.

43. There is no evidence to suggest that the oxygen

separation plant was contemplated by GSC prior to the fall

of 1979. Thus, GSC and UCC had not considered the oxy-

gen separation plant alternative on March 27, 1979, when

PTL issued its report concerning the suitability of GSC’s

slag for use as an engineered fill.

44. The plant site occupied an area of approximately

one hundred fifty (150') feet by one hundred (100') feet on

42a

the southeast corner of the GSC property near the bank of

the Sampit River.

45. Rishel’s first involvement with the oxygen sepa-

ration plant (“plant”) was to prepare the plant site for

construction. Because the plant would sit close to the

Sampit River, this preparation involved determining the

proper support for the plant.

46. The plant contains several heavy structures

which would require separate foundations. These founda-

tions would sit three (3') or four (4') feet underground.

The plant floor was a four (4") inch thick poured-concrete

slab. The plant utilized underground electrical conduits

and underground pipes.

47. The plant operated from a constant supply of four

thousand one hundred sixty (4,160) volts of electricity.

This power was supplied by GSC.

48. Because of the plant’s structure and the sensitive

nature of the plant’s equipment, UCC could tolerate only

minimal differential settlement of the underground sup-

port.

49. Rishel contacted Richard Nance of Law’s

Columbia office to seek help in determining what needed

to be done to prepare the site for the construction of the

plant.

50. Rishel’s discussions with Law culminated on

February 12, 1980, in an agreement between Law and GSC

in which Law agreed to conduct a subsurface investiga-

tion of the plant site. The contract was signed by a Law

representative and by Bill King of GSC. The agreement

43a

includes by reference Law’s proposal dated February 8,

1980. The proposal notes, “Pile foundations are antici-

pated for the proposed new facility with foundation plans

incorporating the recommended pile size to be prepared

by the Oxygen Plant supplier as part of their design pack-

age.” However, the portion of the proposal captioned

“Proposed Professional Services” notes:

Although pile foundations have been employed

for most facilities on the site, it is possible that

the subject facility can be supported on shallow

foundations with proper site preparation if such

preparation is economically competitive with a

pile foundation system.

51. Attached to the contract was a set of “General

Conditions” which included the following:

WARRANTY AND LIMITATION OF LIABIL-

ITY - The only warranty or guarantee made by

Law Engineering Testing Company in connec-

tion with the services performed hereunder, is

that we will use that degree of care and skill or-

dinarily exercised under similar conditions by

reputable members of our profession practicing

in the same or similar locality. No other war-

ranty, express or implied, is made or intended by

our proposal for consulting services or by our

furnishing oral or written reports.

Our liability for any damage on account of any

error, omission or other professional negligence

will be limited to a sum not to exceed $50,000.00

or our fee, whichever is greater. In the event the

client does not wish to limit our professional li-

ability to this sum, we agree to waive this limi-

tation upon receiving client’s written request,

44a

and agreement by the client to pay additional

consideration of 4% of our total fee or $200.00

whichever is greater.

These conditions were made part of the contract by refer-

ence on the first page of the contract, which reference was

initialled by both parties.

92. After the execution of this contract, Law took five

(5S) soil borings and tested the materials as per the Febru-

ary 12, 1980 contract. These efforts culminated in a report

authored by Richard Nance, a Law staff engineer. Stephen

Blevins, Law’s chief engineer at the time, reviewed the

report, and it was issued on March 24, 1980.

53. The report recognized that the material in place at

the site was a mixture of soil, slag and subsurface organics®

and contained three alternative recommendations for site

preparation. The first alternative was to place the plant on

the existing soil/slag mixture after dynamic compaction

of the material to eliminate voids and destroy organics.

Dynamic compaction merely involves densifying in place

material by repeatedly dropping a large, heavy object

(headache ball) on top of the material. The second rec-

ommendation involved excavation of the soil/slag mix-

ture and replacement with clean, compacted sand. The

third recommendation called for placing the plant on

driven piles.

54. After Law issued the report, Blevins had several

conversations with Ross Johnson of UCC, who prepared

* GSC had previously used the site as a dumping ground for slag and

other materials.

45a

the civil engineering design of the plant. Johnson ex-

pressed to Blevins that UCC could tolerate only minimal

differential settlement. As a result of these conversations,

Blevins issued an amendment to Law’s prior report dated

August 29, 1980. In the amendment, Blevins explained

that, because of UCC’s intolerance of differential settle-

ment, Law recommended removal of the soil/slag mate-

rial in place and replacing it with clean compacted sand.

55. On September 5, 1980, Rishel called Blevins and

inquired as to the possibility of replacing the soil/slag

mixture with pure slag instead of clean sand. He was ap-

parently motivated by potential cost savings. The testi-

mony established that filling with slag rather than sand

would result in a saving of one dollar and forty cents per

cubic yard. Rishel informed Blevins that the slag con-

tained lime and heavy metals and read the results of

PTL’s grain-size analysis. Blevins concluded that, with

confirmation of the gradation, the slag should compact

below the water level. Rishel also asked Blevins to pro-

vide a proposal for Law’s overseeing the site preparation

project. He did not tell Blevins about his knowledge that

slag swelled, about the swimming pool incident, or about

the previous problems with the track scales. At this point,

Blevins had no knowledge that certain types of slag were

expansive.

56. Blevins testified that Rishel did tell him at some

point that slag had been successfully used as backfill at

other plant locations.

57. The purpose of a grain-size analysis is to deter-

mine if a material will compact below the waterline. Silts

will not compact below the waterline, so Blevins asked

46a

for the grain-size analysis from Rishel because he was

concerned about the compactability of the slag.

58. Robert McLeod of Law authored, and Blevins ap-

proved, a proposal for testing and inspection services of

the site. The proposal notes:

We understand from Mr. Rishel that the metal

slag material, a by-product of the plants [sic] steel

production, can be processed locally into a well

graded artificial aggregate. With verification of

this gradation, we anticipate the processed ma-

terial will be suitable for use in the backfill re-

quired within the Oxygen Plant.

The proposal provided that Law would provide qualified

engineers to observe the excavation and backfill and

would periodically conduct field density tests to insure

that the material was properly compacted. Attached to the

proposal were general conditions identical to those con-

tained in the February 12, 1980 contract between Law and

GSC.

59. On September 11, 1980, Blevins spoke with Rishel

again. Rishel had received the Law proposal and indicated

that he had no questions concerning the proposal and

that all needed points were addressed.

60. GSC accepted the proposal. The acceptance of the

proposal is evidenced by a GSC purchase order dated Octo-

ber 13, 1980, which references the Law proposal. The pur-

chase order was signed by Bill King as Director of Purchas-

ing at GSC.

61. GSC then began the site preparation, and Fred

Sharpe, a senior materials engineer with Law’s

47a

Charleston, South Carolina, office, undertook to perform

the tasks outlined in the Law proposal.

62. On October 16, 1980, Sharpe visited the plant site

and met with Rishel. Rishel informed Sharpe that GSC

wanted to excavate the soil/slag mixture, remove the or-

ganics and large pieces of slag, and replace and compact

the clean soil/slag mixture. Sharpe obtained samples of

the pure slag from the IMS stockpile and of the soil/slag

mixture which was in place at the site. During this visit,

Rishel told Sharpe that GSC had previously used slag as

backfill with favorable results. Rishel gave Sharpe a copy

of the PTL report, and Sharpe told Blevins that he would

conduct a grain-size analysis for control in the field.

63. Sharpe reviewed the PTL report within two days

of its receipt and then contacted Blevins. Blevins told

Sharpe to confirm the gradation of the slag. Sharpe indi-

cated that a swell test had been conducted on the material,

but neither he nor Blevins knew the reason for the swell

test.

64. Rishel forwarded a drawing of the site and the

specifications for site preparation to Sharpe. The specifi-

cations provided that the backfill material needed to be

compacted to a minimum of ninety-five (95%) percent

maximum density as obtained by Modified Proctor ASTM

D-1557. Thus, GSC looked to Law to insure that the speci-

fications were satisfied.

65. The site preparation proceeded as Rishel had de-

scribed to Sharpe in their October 16, 1980 meeting. The

soil/slag mixture was excavated, cleaned and replaced

back in the site to bring the site within two (2') to two and

48a

a half (2 1/2') feet of grade. UCC would bring the site up to

grade.

66. On January 5, 1981, Law issued a report authored

by Sharpe and approved by Blevins. The report briefly

summarized the activities of Law and presented the test

results for two (2) sieve analyses and two (2) modified

proctor compaction tests. After this report was issued,

Rishel asked Sharpe to include a paragraph concerning

the design bearing pressure. Sharpe reissued the report on

January 20, 1981, and added the following paragraph:

Based on monitoring and approval of the exca-

vation to’ suitable materials, and subsequent

field density testing of structural fill, we recom-

mend that foundations bearing in the fill mate-

rial utilize a total maximum design bearing

pressure of 3000 pounds per square foot.

Rishel asked for the modification of the January 5, 1980

report at the request of UCC.

67. Nothing in any of the discussions between GSC

employees and Law employees and nothing in any of the

agreements between GSC and Law indicates that GSC ex-

pected Law to determine the suitability of the slag backfill

in any other respect beside compaction. In other words,

the scope of Law’s duty to GSC included a determination

that the slag backfill could be and was appropriately com-

pacted to support a load of three thousand (3,000) pounds

per square foot, but did not include a determination that

the slag was not expansive.

68. UCC commenced work on the plant in the be-

ginning of January 1980 and brought the site up to grade

49a

by filling with pure slag from the IMS stockpile. The plant

was completed in September of 1980.

69. In September 1981, GSC became aware of cracks in

the floor of the refractory warehouse, and it attempted to

repair these cracks by filling them with grout. Approxi-

mately a year later, the cracks in the warehouse floor re-

opened. Rishel testified it was at this point, in the fall of

1982, that he first suspected that there might be a problem

with the slag fill.

70. Problems developed at the oxygen separation

plant shortly after its completion. Lou Neiman, a UCC

employee, managed the plant beginning in 1981. He stated

that he first noticed trouble at the plant in 1982. The ex-

pansive slag had caused stress on the electric cables and

floor heaving had created tripping hazards. Initially,

Neiman suspected that the foundations were sinking, but

he subsequently learned that the floor of the plant was ris-

ing.

71. The plant continued in operation until 1985, but

the problems worsened. Samuel Sullivan was UCC’s re-

gional production manager, and he recommended closing

down the plant in June or July of 1985 for the following

reasons: (1) the buss in the high voltage motor control

system was stressed, (2) several concrete block walls were

cracked and dangerous and rather than protecting em-

ployees in the event of an explosion would create a

greater hazard, (3) the cracks in the floor posed a major

safety hazard, (4) pipe loading existed in the booster oxy-

gen compressor area, and (5) soil heave and floor move-

ment made the integrity of the grounding system ques-

tionable.

50a

72. The parties do not dispute that the problems at

the plant necessitated its being shut down nor do they

dispute that the problems were caused by the expansion of

the slag underneath the structure. In fact, in November of

1982, Sharpe suggested that Law conduct tests to deter-

mine if the slag beneath the plant was expansive. Law

performed an autoclave test on the slag which revealed

that the slag was indeed expansive. The report which is-

sued as a result of this test was dated December 8, 1982.

73. In 1968 or 1969, an article written by Carl B.

Crawford and Kenneth N. Burn entitled “Building Dam-

age from Expansive Steel Slag Backfill” was published. In

1979, both PTL and Law had this article available to them.

PTL had a copy of the article in its Jacksonville office, and

Law had the article in its Atlanta, Georgia, office.

74. Jack Roseman testified as PTL’s corporate de-

signee. He is currently the manager of the geotechnical

department for PTL and works in PTL’s Pittsburgh office.

He began working for PTL in 1978. He testified that, in

1979, PTL was regionalized with divisions in the south-

east, northeast, west, and southwest. Each region had a

separate vice-president who reported to the president in

Pittsburgh.

75. Roseman stated that he knew in 1979 that slag

produced in open hearth or electric arc furnaces swelled.

In fact, he included a statement in all of his geotechnical

soil reports warning against the use of these types of slag

as backfill.

76. Paul H. Gooding testified as Law’s corporate de-

signee. Gooding is currently employed by Law Associates,

5la

a wholly-owned subsidiary of Law, and was employed by

Law from 1968 to 1986. His employment at Law included a

fourteen (14) year stint at Law’s Birmingham, Alabama,

office. He testified that the reports which issued while he

was in Birmingham were not cleared through Law’s At-

lanta office.

77. Gooding also testified, however, that he and

probably all other geotechnical engineers employed in

Law’s Birmingham office knew in the early 1970’s that

slag had expansive qualities and that it could cause prob-

lems if used as an engineered fill.

’

CONCLUSIONS OF LAW

1. This court has jurisdiction of this action pursuant

to 28 U.S.C. § 1332.

2. As mentioned earlier, several objections were ten-

dered at trial to the scope of certain experts’ testimony.

After considering the briefs of the parties and reviewing

the depositions of the experts to whose testimony objec-

tions were tendered, the court concludes that the parties

were on notice of all expert testimony with the exception

of the testimony of plaintiff's expert Paul C. Rizzo in re-

gard to the reasonableness of the conduct of Steve Rishel.

GSC did not indicate in its responses to the court's

interrogatories propounded in Local Rule 7.05 that

Rizzo’s testimony would include opinions concerning the

reasonableness of Rishel’s conduct. Furthermore, the

parties did not discuss the reasonableness of Rishel’s con-

duct at Rizzo’s deposition on November 25, 1986.

Therefore, the court sustains the objection to this

testimony and excludes any testimony of Rizzo relating to

the reasonableness of Rishel’s conduct. All other objec-

tions which pertain to any expert testifying to matters

which were not delineated in the responses to the court’s

interrogatories are overruled on the ground that the

matters were sufficiently discussed at the various deposi-

tions to place the complaining party on notice of the tes-

timony.

3. PTL argues in its brief that the court should ex-

clude plaintiff's Exhibit 123. PTL objected to this exhibit at

trial, and the court once again reserved a ruling until this

time. Plaintiff’s Exhibit 123 is a graph of the data points

obtained during the swell test conducted on the slag by

PTL. The graph was plotted by plaintiff's expert Scott

Fletcher, and he testified that PTL violated the appropriate

standard of care by not attaching a similar graph to the

report it issued on March 27, 1979.

PTL objects on the ground that it had no notice that

failure to attach a graph to the report would be an alleged

ground of negligence on its part. It claims that neither the

responses to the court’s interrogatories nor Fletcher’s de-

position testimony indicated his intention to testify con-

cerning PTL’s negligence in not attaching the graph.

GSC contends, and Fletcher testified at his deposition,

that PTL should have been alerted to the potential

expansive nature of the slag based on his observation that

about two-thirds (2/3) of the total swell occurred during

the final twenty-four (24) hours of the test. The purpose of

the graph, according to Fletcher, was to illustrate two facts:

(1) the slag swelled disproportionately during the final

53a

twenty-four (24) hours of the test, and (2) the slag had not

stopped sweiling at the conclusion of the test.

The court finds that Fletcher’s deposition testimony

concerning PTL’s failure to recognize these two alleged

facts is sufficiently related to the testimony concerning the

graph to place PTL on notice that GSC would allege that

the failure to recognize the swelling trend constituted

negligence, as did the failure to graph the data points

which would have allegedly revealed the trend. The ob-

jection of PTL to plaintiff's Exhibit 123 is hereby over-

ruled.

Having resolved the evidentiary disputes which re-

mained after the trial, the court now turns its attention to

the liability of the defendants on the claims of GSC and

the claims assigned to GSC by UCC. GSC sued both Law

and PTL on theories of negligence, breach of implied war-

ranty and breach of express warranty. UCC originally

crossclaimed against Law and PTL on these same theories,

and it is these claims which UCC assigned to GSC. The

court will treat individually the different parties’ claims

against each defendant on each theory.

I. GSC v. PTL

A. Negligence

4. In South Carolina, in order to prevail on a negli-

gence cause of action, the plaintiff must prove each of

three elements. Specifically, the plaintiff must prove ”(1)

the existence of a duty on the part of the defendant to pro-

tect the plaintiff; (2) the failure of the defendant to dis-

charge the duty; (3) injury to the plaintiff resulting from

54a

the defendant’s failure to perform.” S.C. State Ports Au-

thority v. Booz-Allen & Hamilton, Inc., 289 S.C. 373, 346

S.E.2d 324 (1986).

5. In negligence cases in which there is an agreement

between the parties, the agreement defines the scope of

the parties’ duties toward each other. In Crawford v. Pow-

ers, 419 F. Supp. 723, 729 (D.S.C. 1974), the court concluded:

Where the only relation between the parties is

contractual, Jiability must arise out of some pos-

itive duty which the law imposes because of the

relationship or because of the negligent manner

in which some act provided for in the contract is

performed.

Thus, unless the law imposes some other positive duty

on PTL, it had only a duty to perform the tests requested

by GSC in its purchase order in a non-negligent manner.

6. In cases of professional negligence or malpractice

in South Carolina, the professional may be held liable for

damages resulting from his conduct if he acted differently

than would a reasonably prudent professional in the

same or similar circumstances. Kemmerlin v. Wingate,

274 S.C. 62, 65, 261 S.E.2d 50, 51 (1979). South Carolina ap-

plies a national standard to physicians, King v. Williams,

276 S.C. 478, 279 S.E.2d 618 (1981), and accountants,

Folkens v. Hunt, 290 S.C. 194, 348 S.E.2d 839 (S.C. App.

1986).

7. The court previously found that PTL did not un-

dertake a full-scale soil investigation to determine if the

slag was suitable for use as a backfill. Rather, GSC directed

PTL to conduct certain tests. The court now concludes that

55a

PTL’s conduct of the tests requisitioned by GSC comported

with the degree of care and skill required of geotechnical

engineers practicing in this country. The court finds that

the degree of care and skill required in this case is defined

by the ASTM standards, and not one expert testified that

PTL did not comply with those standards.

8. The court further concludes that, even though the

swell of the slag sample occurred substantially within the

last quarter of the swell test, the size and percentage of

swell was so slight that PTL need not have been alarmed

to observe such swell. This conclusion is supported by the

testimony that the margin for error of the swell test

ranged between twelve and a half (12 1/2%) and twenty-

five (25%) percent of the entire swell. Failure to include a

graph or to include test results in the report issued to GSC

did not constitute negligence. Such attachments are not

required by ASTM D-1883. In fact, ASTM D-1883 requires

only that the sample be measured at the beginning and

the end of the swell test. Thus, failure to recognize or find

significant the fact that the swell of this slag sample oc-

curred substantially during the last twenty-four (24) hours

of the test did not constitute negligence on the part of

PTL. This conclusion is bolstered by the fact that the swell

test, which was requested by GSC, was not intended to test

for expansiveness per se. Rather the swell test is only part

of the CBR test which is used to determine the strength of

materials to be placed under roadways.

9. Because PTL was not instructed to conduct a full-

scale soil investigation, the contract imposed no duty on

PTL to conduct a literature search to determine if slag was

suitable for use as an engineered fill, and its failure to do

so did not constitute negligence.

10. The court now turns to the issue of PTL’s knowl-

edge. In South Carolina, the knowledge of an officer or

agent of a corporation obtained in the course of the offi-

cer’s or agent’s employment is imputed to the corpora-

tion. S.C. Law Enforcement Div. v. The “Michael &

Lance”, 284 S.C. 368, 370, 327 S.E.2d 327, 328 (1985). In that

case, the agent of a corporation engaged in the business of

shrimping used the corporation’s shrimp boat to smuggle

marijuana. The corporation contested the forfeiture based

on its lack of knowledge of its agent’s drug smuggling ac-

tivities. The court held that the knowledge of the agent

was imputed to the corporation and, reversing the lower

courts, ordered forfeiture of the boat.

The case at bar is a much more compelling case for

imputing knowledge to the corporate defendants. How-

ever, the same principle applies to the plaintiff. Thus,

while the court concludes that PTL had knowledge in

1979 that electric arc furnace slag swelled, it must also

conclude that GSC had knowledge in 1977 that the steel

Slag it produced swelled, and had knowledge in 1979 that

slag swelled.

Admittedly, a gap exists in the testimony concerning

GSC’s knowledge of the expansiveness of its own slag

between the time Owen Gochenaur left GSC sometime

prior to 1979 and the time when the slag was first used as

fill on the GSC premises. However, it is significant that

GSC’s purchasing agent, Bill King, signed the purchasing

agreement between GSC and R. B. Pond in 1977, and he

was still present at GSC when it started using slag as fill.

57a

Furthermore, Rishel definitely knew that slag swelled

prior to suggesting that slag be used as backfill.

11. The court finds, finally, that PTL was negligent in

inciuding the statement in the conclusion section of its

report to GSC that the slag “may be suitable for using as

an engineered fill, provided that the material should be

compacted to a minimum of 95% maximum density as

obtained by Modified Proctor ASTM D-1557.” The court

bases this conclusion on PTL’s knowledge of the expan-

sive quality of electric arc slag, and on PTL’s admission

that it did not undertake a full-scale soil investigation.

The inclusion of the above-quoted opinion exceeded

the scope of PTL’s obligations. Once PTL undertook to

render an opinion concerning the suitability of the slag as

engineered fill, the law imposed a duty on it to exercise

reasonable care in the formulation of that opinion. The

testimony unequivocally establishes that the swell test

was not an appropriate test for determining the swell, and

PTL admits that it did not conduct a full-scale soil investi-

gation. In light of these facts, the court finds that PTL was

negligent in rendering an opinion based on the limited

scope of its testing and investigation. Furthermore, since

PTL undertook to give an opinion on the suitability of the

slag as an engineered fill, it had a duty to inform GSC of

its knowledge of the expansiveness of slag and/or to con-

duct a full-scale soil investigation which would have re-

vealed that the slag swelled.

12. The conclusion reached with respect to PTL’s

negligence does not change depending on whether the

court applies a national or local standard to PTL. The

court concludes that with respect to certifying any mate-

58a

rial as suitable for engineered fill, an engineer either in

this locality or elsewhere should conduct a full-scale in-

vestigation to insure the accuracy of his certification. The

fact that slag is not a frequently encountered material in

this locality is not relevant to this court’s determination

that PTL was negligent in including in the report the con-

clusion concerning the suitability of slag.

13. A negligent actor is liable for the foreseeable con-

sequences proximately caused by his negligence.

The standard by which foreseeability is deter-

mined is that of looking to the natural and

probable consequences of the act complained of.

It is not necessary that the actor must have con-

templated or could have anticipated the particu-

lar event which occurred. He may be liable for

anything which appears to have been a natural

and probable consequence of his negligence. “If

the actor’s conduct is a substantial factor in the

harm to another, the fact that he neither foresaw

nor should have foreseen the extent of the harm

or the manner in which it occurred does not

negative his liability.”

Daniel v. Days Inn of America, Inc., 292 S.C. 291, 301, 356

S.E.2d 129, 134-35 (S.C. App. 1987) (citations omitted).

14. The court finds that PTL could foresee that GSC

would place slag as engineered fill underneath structures,

and that if the slag expanded, damage would result. Fur-

thermore, though neither PTL nor GSC had contemplated

in March of 1979 that the slag would be used underneath

the refractory warehouse or the oxygen separation plant,

such specific foresight is not a condition of liability. As

noted earlier, it is not necessary that a negligent actor

59a

foresee a particular event; rather, in order to impose lia-

bility, the negligent actor is held accountable for all natu-

ral and probable consequences of his negligent acts. Thus,

the court finds that the damages suffered by GSC as a re-

sult of its use of slag as backfill were a foreseeable conse-

quence of PTL’s negligence.

15. In the State of South Carolina, however, contribu-

tory negligence of the plaintiff is a complete bar to recov-

ery on the negligence claim. South Carolina Insurance Co.

v. James C. Greene and Co., 290 S.C. 171, 177, 348 S.E.2d

617, 620 (S.C. App. 1986), Pilot Freight Carriers, Inc. v.

Spivey, 278 F. Supp. 520, 524 (D.S.C. 1967). In the former

case, the South Carolina Court of Appeals defined con-

tributory negligence:

Contributory negligence is a lack of ordinary care

on the part of a person injured by the negligence

of another which combines and concurs with

that other’s negligence and contributes to the

injury as a proximate cause without which in-

jury would not have occurred.

South Carolina Ins. Co. v. James C. Green and Co., 290

S.C. 177, 348 S.E.2d at 620.

16. In 1979, GSC knew through Rishel that slag

swelled. In 1977, GSC knew that the slag it produced

swelled, and because of this knowledge it periodically had

the slag chemically analyzed. In light of these facts, the

court finds incredulous the fact that no one at GSC sus-

pected slag swelling when the initial problems with the

track scale developed. There was testimony that a reason-

ably prudent civil engineer with Risiiel’s background and

knowledge should have suspected slag swelling when the

60a

track scale problems developed and should have had the

slag further tested to determine if it was causing the

problems at the track scale, and the court agrees. For this

reason, the court finds GSC contributorily negligent in

failing to recognize the slag swelling problem with the

track scale.

17. Again the applicability of a local or national stan-

dard is not relevant to the court’s conclusion concerning

GSC’s negligence. The court finds from the testimony that

a civil engineer practicing in this locality or elsewhere

who had a material tested because he was concerned

about its suitability for engineered fill, who receives a re-

port saying the material may be suitable for engineered

fill, who relies on that report to place the fill beneath a

track scale, and who subsequently discovers structural

problems with the scale, should suspect that the suspi-

cious material placed as fill is causing the problems and

should have the material tested further. The facts that

this material was slag and that this material is not particu-

larly common in this locality are not relevant to the

court’s conclusion that GSC was contributorily negligent.

18. Further testing of the slag would have revealed,

as did the Law test in 1982, that the slag swelled. Since the

problems with the track scale developed prior to the con-

struction of the truck scale, the refractory warehouse and

the oxygen plant, the damage resulting from GSC’s plac-

ing slag underneath these structures could have been

prevented had Rishel’s conduct been consistent with that

of a reasonably prudent engineer in the same or similar

circumstances. Thus, the court concludes that the con-

tributory negligence of GSC was a proximate cause of the

6la

damage suffered by it as a result of expansive slag being

placed underneath the truck scale, the refractory ware-

house addition and the oxygen separation plant.

19. Based on the foregoing, the court finds that GSC is

barred from recovering on its negligence claim for dam-

age it suffered as a result of slag being placed as fill be-

neath the truck scale, the warehouse and the oxygen

plant.

20. The court found earlier that the replacement of

the slag at the track scale cite [sic] cost GSC three thousand

two hundred thirty-three ($3,233.00) dollars. GSC is enti-

tled to recover this amount from PTL on its negligence

claim.

B. Breach of implied warranty

21. In South Carolina:

It is settled law that where a person holds him-

self out as specially qualified to perform work of

a particular character, there is an implied war-

ranty that the work which he undertakes to do

shall be of proper workmanship and reasonably

fitted for its intended purpose.

Hutson v. Cummins Carolinas, Inc., 280 S.C. 552, 558, 314

S.E.2d 19, 23 (S.C. App. 1984).

22. The court finds that PTL held itself out as quali-

fied to test soils. Furthermore, the conclusion with respect

to slag combined with the representations that PTL was a

qualified geotechnical testing laboratory amounted to a

holding out that PTL was qualified to determine the suit-

ability of materials as engineered fill. Therefore, PTL im-

62a

pliedly warranted that the report it issued would be suit-

able for its intended purpose. Rishel’s intent was to de-

termine from the report if slag was suitable as engineered

fill.

23. The report was in fact not suitable for its intended

purpose because the conclusion reached therein was not

based on sufficient information and was reached despite

PTL’s corporate knowledge that electric arc furnace slag is

expansive. Thus, PTL breached the implied warranty of

workmanlike performance.

24. In Georgetown Towing Co. v. National Supply

Co., 204 S.C. 445, 29 S.E.2d 765 (1944), the plaintiff had pur-

chased a ninety-horsepower marine engine from the de-

fendant, and the court found that the defendant impliedly

warranted the proper installation of the engine. In the

plaintiff's action based on the implied warranty, the court

held:

In a case of this kind, the [plaintiff] may recover,

in addition to general damages, any special or

consequential damages which he may have suf-

fered by reason of breach of warranty, and which

are the natural and direct or proximate result of

the breach, and may reasonably be considered as

within the contemplation of the parties at the

time the contract was made.

Id., 29 S.E.2d at 767.

25. As the court previously noted, neither the refrac-

tory warehouse addition nor the oxygen separation plant

were in the contemplation of either party at the time PTL

issued its report in March 1979. Had PTL known that the

63a

slag would be placed under a multi-million dollar struc-

ture, it may have conducted further tests, conducted lit-

erature searches and/or contacted other offices within the

PTL system to further substantiate its conclusion concern-

ing steel slag. The rule annunciated in Georgetown

Towing is clear and unavoidable in this case. Because the

warehouse addition and the oxygen separation plant were

not in the contemplation of the parties at the time the

implied warranty of workmanlike performance arose,

PTL cannot be held liable for the damage which resulted

from GSC’s placing slag under these structures.

26. As previously noted, the communication be-

tween PTL and GSC was minimal. It does not appear from

the testimony that GSC informed PTL of any particular

structure under which it would place slag. More specifi-

cally, there is no evidence that PTL was informed that the

slag would be placed under the track scale, so this item of

damage is not recoverable based on breach of implied

warranty.

C. Breach of express warranty

27. GSC contends that the statement contained in

PTL’s report that the slag may be suitable as an engineered

fill constituted an express warranty that the slag was in

fact suitable. In Roundtree Villas Assoc., Inc. v. 4701 Kings

Corp., 282 S.C. 415, 423, 321 S.E.2d 46, 51 (1984), then Chief

Justice Littlejohn noted, “A warranty...is, in effect, a con-

tract.” South Carolina’s version of the Uniform Com-

mercial Code provides that express warranties are created

by “[a]ny affirmation of fact or promise ... made by the

seller to the buyer, whether directly or indirectly, which

refers to the goods and becomes part of the basis of the

64a

———eeSGSOoo

bargain creates an express warranty ....” S.C. CODE ANN. §

36-2-313 (Law Co-op. 1976).

28. The court realizes that the Uniform Commercial

Code is not applicable to this case and looks to that statute

only for direction. It appears that the statement contained

in the report from PTL concerning the suitability of slag

does not constitute a warranty. Rather, that statement is a

mere representation. The statement did not form the ba-

sis of the agreement between PTL and GSC, and did not

constitute any type of contract between the parties. For

these reasons, the statement did not create an express

warranty that the slag was suitable as engineered fill,” and

GSC’s claim based on express warranty must fail.

II. UCC v. PTL

A. Negligence

29. As noted earlier, the first element of a negligence

case in South Carolina is “the existence of a duty on the

part of the defendant to protect the plaintiff.”.S.C. State

Ports Authority v. Booz-Allen & Hamilton, Inc., 289 S.C.

373, 346 S.E.2d 324 (1986).

” {t would appear to the court that, even if the statement did create an

express warranty, the plaintiff could still not recover because the dam-

ages were not in the contemplation of PTL when it issued its report.

Fer further discussion refer to the section of this order addressing

GSC’s implied warranty claim against PTL.

* As mentioned earlier, these claims were assigned to and prosecuted

by GSC. For simplicity’s sake, the court will discuss these claims as if

UCC were still a party to this suit.

30. In the S.C. State Ports Authority case, the exis-

tence of a duty was in issue. The court recognized that

F “{ljiability for negligence in preparing reports has been

extended to parties other than those to the contract in

certain circumstances.” Id. at 376, 346 S.E.2d at 326. How-

ever, the court also recognized that “[t]he concept of duty

in tort liability must not be extended beyond reasonable

limits.”

31. In that case, the plaintiffs included the S. C. State

Ports Authority (SCSPA), the Charleston Branch Pilots

Association, and two locals of the longshoremen’s union.

The defendant prepared a report at the request of the Ge-

orgia Ports Authority which unfavorably compared the

Charleston (S. C.) port to the Savannah (Ga.) port. The

court held that the defendant owed a duty to the SCSPA

to exercise reasonable care in the issuance of the report,

but that the relationship between the defendant and the

other plaintiffs, who alleged lost profits as a result of the

report, was too attenuated to support a duty of due care.

The distinction between the different plaintiffs would

seem to be the degree to which damage to each party

could have been anticipated by the defendant.

32. In the case at bar, as noted earlier, the oxygen sep-

aration plant was not within any of the parties’ contem-

plation when PTL issued its report. The court, therefore,

finds that, while it was foreseeavle that GSC would erect

slag-supported structures, it was not foreseeable that UCC

would rely on this report and suffer damage thereby. For

this reason, the court concludes that PTL owed no duty to

UCC and cannot be held liable for damage it may have

suffered as a result of PTL’s negligence.

66a

B. Breach of implied warranty

33. Assuming arguendo that the implied warranty of

workmanlike performance extended to UCC, it still can-

not recover against PTL. As noted earlier, a party may be

held liable for consequential damages flowing from a

breach of warranty only if the particular consequences

were in the contemplation of the parties at the time of

contracting.

34. Neither PTL, GSC, nor UCC contemplated the

construction of the oxygen separation plant in March 1979

when PTL issued the report. Thus, PTL cannot be held li-

able to UCC for damages it may have suffered as a result

of the slag expansion at the oxygen plant. GSC is entitled

to take nothing on the claims against PTL assigned to it by

UCC.

III. GSC v. Law

A. Negligence

35. Law was in no way responsible, nor was any re-

sponsibility alleged against Law, for damage to GSC result-

ing from the scales or the refractory warehouse. Law’s in-

volvement in this case was solely related to the oxygen

separation plant.

36. As noted earlier, the duty owing from one con-

tracting party to another is primarily defined by the terms

of the contract. Crawford v. Powers, 119 F. Supp. 723

(D.S.C. 1974). In the negligence case against Law, this rule

of law is particularly relevant.

67a

37. Law and GSC entered into two agreements. The

first agreement provided that Law would perform an in-

vestigation into potential support designs for the oxygen

plant. This agreement culminated, after intervention by

UCC, in Law’s recommending excavation of the existing

fill and replacement with clean sand backfill. Subsequent

to this recommendation, Rishel contacted Law to deter-

mine if slag backfill might be suitable. He informed Law

that the fill had been successfully used on previous GSC

projects, and Law was concerned only with whether the

slag could be sufficiently compacted.

38. The second agreement related to the testing of the

fill as it was being placed in the site. Rishel reviewed the

proposal prior to its becoming an agreement and specifi-

cally noted that all needed points were addressed by the

proposal. This proposal said absolutely nothing about

Law’s testing the slag to determine whether it was appro-

priate for use as backfill except to the extent that Law

would determine if sufficient compaction was being

achieved at the site.

39. Having reviewed the proposal and approved its

scope, GSC cannot now contend that it was within Law’s

scope of duty to determine if the slag swelled. Admittedly,

Law had knowledge of the expansive qualities of slag, but

the assurances it received from Rishel concerning the

successful prior use of slag could have been reasonably

relied on by Law in not pursuing the issue of expansive-

ness.

40. Thus, the court concludes that law [sic] was not

negligent in failing to conduct a literature search, failing

68a

to test the slag for expansiveness, or failing to inform GSC

of its knowledge that slag swelled.’

41. As found earlier, GSC was contributorily negli-

gent in not suspecting slag problems and in not having

the slag tested further once the problems developed with

the track scale. With respect to Law, the court finds that

GSC was contributorily negligent in not telling Law of the

problems at the track scale of which it was aware. Addi-

tionally, GSC was contributorily negligent in telling Law

that it had used slag as backfill without incident when, in

fact, an incident had occurred at the track scale prior to the

construction of the oxygen plant.

42. The court finds that GSC’s contributory negli-

gence was a proximate cause of the damage at the oxygen

plant. Had Law been put on notice that the slag had

caused problems in the past or that slag had been placed

beneath the walls at the track scale and that problems had

thereafter developed, it could have tested the slag for ex-

pansiveness, conducted a literature search and contacted

other offices to determine the characteristics of slag. Such

activity would have revealed that the slag swelled, and

the disaster at the plant would have been avoided.

43. Furthermore, as noted earlier, Rishel’s failure to

suspect slag swelling at the track scale and subsequent

” Law contends that the limitation clause of the contract defines the

relevant standard of care for GSC’s negligence action. The court's find-

ing with respect to Law’s negligence is standard neutral. In other

words, the court’s conclusions do not vary depending on the applica-

tion of a local or national standard of care.

69a

failure to have the slag tested were also proximate causes

of the damage at the oxygen plant.

44. Thus, because the court finds that Law was not

negligent and that GSC was negligent, the negligence

claim of GSC against Law must fail.

B. Breach of Warranty

45. The court will treat the two breach of warranty

claims against Law together because both are irextricably

related to the limitation of liability clause contained in

both agreements between Law and GSC. This clause at-

tempts to limit Law’s liability in three ways. First, it de-

fines the standard of care to which Law will be held. Sec-

ond, it limits the amount of Law’s liability to fifty thou-

sand ($50,000) dollars. Third, it disclaims all other war-

ranties.

46. GSC argues that the warranty was not made part

of the agreement. In South Carolina Electric & Gas Co. v.

Combustion Engineering, Inc., 283 S.C. 182, 322 S.E.2d 453

(S.C. App. 1984), the court addressed the issue of the via-

bility of a limitation of warranty in a transaction between

two commercial actors. The court looked at three factors

to determine whether the warranty was made part of the

agreement: (1) the degree to which the parties negotiated

for or against the inclusion of the limitation clause, (2)

the relative bargaining strength of the parties, and (3) the

location and clarity of the clause itself.

47. Applying these factors to the case at bar, the court

concludes that the clause entitled “WARRANTY AND

LIMITATION OF LIABILITY” did become a part of both

70a

agreements between Law and GSC. The evidence does not

indicate that the limitation was explicitly negotiated, but

the clause itself provided an easy escape from limitation.

GSC merely had to pay an additional four (4%) percent of

the fee or two hundred ($200.00) dollars, whichever was

greater, and the limitation of liability clause would not

have been applicable in this case. Nor does the evidence

indicate that either party was at a disadvantage at the bar-

gaining table. Finally, the heading of the clause was

printed in all capitals and thereby called attention to itself.

Furthermore, there is nothing ambiguous about the

clause, and the fact that GSC did not call to Law’s atten-

tion any ambiguity at the time the contract was formed

leads the court to believe that its current allegations of

ambiguity are an afterthought.

More pointedly, the court finds, as did the court in

the South Carolina Electric & Gas case, that it strains

credulity to believe that GSC, a commercial sophisticate,

entered into an agreement without reading it and consid-

ering the implications of a clause limiting Law’s liability.

GSC had to realize the potential for large damages if the

Law work proved faulty, but it apparently did not consider

the limitation clause significant enough to pay the small

fee required to avoid its effects.

48. Thus, the court finds that the only warranty exist-

ing between GSC and Law was defined by the relevant

clause in the Law proposals, and will, therefore, look to

this warranty to determine if Law has breached any war-

ranty owing to GSC.

7la

49. Law warranted that it would perform its tasks

with that degree of skill and care exercised by engineers

practicing in this locality. As mentioned earlier, the only

manner in which the locality standard figures into this

case at all is in the issue of knowledge of the expansive-

ness of slag. The court finds, however, that the testimony

was clear that an engineer in this or any locality performs

the tasks required by the agreement pursuant to which he

acts.

50. The credible testimony indicated that the agree-

ments between Law and GSC did not impose on Law the

obligation of determining whether the slag was expan-

sive. This finding is based on the language of the agree-

ments which makes no mention of expansiveness, and

on the fact that Rishel informed Law that he had previ-

ous success with the use of slag as backfill, indicating that

he was no longer concerned with whether the slag was

expansive.

51. For the above reasons, the court concludes that

Law did not breach any warranty extending to GSC, and

the court will direct entry of judgment for Law on this

portion of GSC’s claim.

IV. UCC v. Law

A. Negligence

52. In South Carolina:

The relationship of agency need not depend

upon express agreement and acceptance thereof.

Generally, agency may be, and frequently is, im-

plied or inferred from the words and conduct of

72a

the parties and circumstances of a particular

case.

Bankers Trust of South Carolina v. Bruce, 283 S.C. 408,

423, 323 S.E.2d 523, 532 (S.C. App. 1984) (citations omitted).

53. In the case at bar, UCC determined the specifica-

tions necessary for the site preparation and then desig-

nated GSC to prepare the site. Pursuant to this designa-

tion, GSC contracted with Law for engineering services on

two occasions.

54. Each of the two contracts resulted in a report is-

sued by Law, and UCC received each of these reports.

After receiving the first report, UCC informed Law about

the minimal tolerance of differential settlement. Law

amended its report such that the sole site plan recom-

mended by Law was the excavation of the existing fill and

replacement with clean sand. After receiving the second

report, UCC directed Rishel to contact Law to gain assur-

ance that the fill in place at that point would support

three thousand (3,000) pounds per square foot.

55. The court finds, based on these facts, that GSC

acted on UCC’s behalf when it entered into the agree-

ments with Law, and, therefore, acted as the agent of

LS 2 a.

sions of Law for clarity’s sake only. It is clear that the determination of

the existence of an agency relationship is a question of fact. Gathers v.

Harris Teeter Supermarket, Inc., 282 S.C. 220, 226, 317 S.E.2d 748, 752

(S.C. App. 1984).

73a

56. An agent binds a principal to the same extent as if

the principal personally made the contract. South

Carolina Insurance Co. v. James C. Greene and Co., 290

S.C. 171, 183, 348 S.E.2d 617, 624 (S.C. App. 1986). Thus, the

duty owed by Law to UCC is defined by the agreement ar.d

is identical to the duty owed to GSC. The court has previ-

ously determined that this duty did not include the de-

termination of whether the slag was expansive. For this

reason and the reasons outlined in the discussion of the

negligence claim of GSC, the court finds that UCC’s negli-

gence claim must fail.

57. The court notes, as an additional reason why UCC

cannot prevail on the negligence claim, that the contribu-

tory negligence of an agent can be imputed to the princi-

pal. See South Carolina Ins. Co. v. James C. Greene and

Co., 290 S.C. 171, 348 S.E.2d 617. Thus, GSC’s contributory

negligence bars the recovery of UCC on the negligence

claim.

B. Breach of Warranty

58. Since GSC acted as UCC’s agent, the warranty be-

tween Law and UCC is likewise defined by the warranty

and limitation of liability clause of the Law proposals. As

the court has previously found with respect to GSC, Law

did not breach the warranty created by the agreement, and

UCC’s breach of warranty claim must also fail.

74a

CONCLUSION

Based on the foregoing Findings of Fact and Conclu-

sions of Law, it is

ORDERED, that the Clerk of Court enter judgment

for Georgetown Steel Corporation against defendant Pitts-

burgh Testing Laboratories, Inc. in the amount of THREE

THOUSAND TWO HUNDRED THIRTY-THREE AND

NO/100THS ($3,233.00) DOLLARS. It is

ORDERED FURTHER, that the Clerk of Court enter

judgment in favor of the defendant Law Engineering

Testing Company, Inc. on all claims of Georgetown Steel

Corporation.

AND IT IS SO ORDERED.

/s/ FALCON B. HAWKINS

FALCON B. HAWKINS

United States District Judge

Charleston, S. C.

July 3rd, 1988.

75a

Appendix C

AMENDED JUDGMENT IN A CIVIL CASE

UNITED STATES DISTRICT COURT

SOUTH CAROLINA

DOCKET NO. C/A2:85-0440-1

GEORGETOWN STEEL CORPORATION

UNION CARBIDE CORPORATION,

LAW ENGINEERING TESTING COMPANY AND

PITTSBURGH TESTING LABORATORY, INC.

Judge Falcon A. Hawkins

( ) Jury Verdict. This action came before the Court and a

jury with the judicial officer named above presiding. The

issues have been tried and the jury has rendered its ver-

dict.

(X) Decision by Court. This action came to trial or before

the Court with the judge named above presiding. The is-

sues have been tried and a decision has been rendered.

IT IS ORDERED AND ADJUDGED

that the plaintiff, Georgetown Steel Corporation, re-

cover of the defendant, Pittsburgh Testing Laboratories,

Inc., the sum of Three Thousand Two Hundred Thirty-

Three and NO/100ths ($3,233.00) Dollars with interest at

the rate of 7.54% percent as provided by law, and his costs

of action.

76a

IT IS FURTHER ORDERED AND ADJUDGED that

judgment be entered in favor of the defendant Law Engi-

neering Testing Company, Inc., on all claims of plaintiff,

Georgetown Steel Corporation.

Ann A. Birch

Clerk

/s/ Margaret King

Deputy Clerk

Date: 7-15-88

Appendix D

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF SOUTH CAROLINA

CHARLESTON DIVISION

GEORGETOWN STEEL CIVIL ACTION

CORPORATION, #2:85-0440-1

Plaintiff,

VS. ORDER

LAW ENGINEERING TESTING

COMPANY, and PITTSBURGH

TESTING LABORATORY, INC.,

)

UNION CARBIDE CORPORATION, | )

)

Defendants. )

)

On July 5, 1988, the court issued Findings of Facts and

Conclusions of Law directing the clerk of court to enter

judgment for the plaintiff against defendant Pittsburgh

Testing Laboratory, Inc. in the amount of three thousand

two hundred thirty-three and no/100ths ($3,233.00) dol-

lars and for the defendant Law Engineering Testing Com-

pany on all of plaintiff's claims.

Defendant Law Engineering Testing Co. subsequently

moved to amend the judgment to include an award of its

costs of action. The court has been notified by the attor-

ney’s for the plaintiff that the plaintiff does not oppose

the motion. It is, therefore,

78a

ORDERED, that the motion of Law Engineering Test-

ing Co. to amend the judgment be, and the same is

hereby, granted, and the clerk of court is hereby directed to

amend the judgment to reflect that Law Engineering Test-

ing Co. shall recover its costs of action from the plaintiff.

AND IT IS SO ORDERED.

/s/ Falcon B. Hawkins

Falcon B. Hawkins

United States District Judge

Charleston, S. C.

November 28, 1988

79a

Appendix E

AMENDED JUDGMENT IN A CIVIL CASE

UNITED STATES DISTRICT COURT

SOUTH CAROLINA

DOCKET NO. C/A2:85-0440-1

GEORGETOWN STEEL CORPORATION

LAW ENGINEERING TESTING COMPANY AND

PITTSBURGH TESTING LABORATORY, INC.

Judge Falcon B. Hawkins

( ) Jury Verdict. This action came before the Court and a

jury with the judicial officer named above presiding. The

issues have been tried and the jury has rendered its ver-

dict.

(X) Decision by Court. This action came to trial or before

the Court with the judge named above presiding. The is-

sues have been tried and a decision has been rendered.

IT IS ORDERED AND ADJUDGED

that the plaintiff, Georgetown Steel Corporation, re-

cover of the defendant, Pittsburgh Testing Laboratories,

Inc., the sum of Three Thousand Two Hundred Thirty-

Three and no/100 ($3,233.00) Dollars with interest at the

rate of 7.54 percent as provided by law, and its costs of ac-

tion.

FURTHER ORDERED that judgment is entered in

favor of defendant Law Engineering Testing Company,

Inc., on all claims of plaintiff Georgetown Steel Corpora-

tion and that defendant Law Engineering Testing recover

from plaintiff Georgetown Steel its costs of action.

AMENDED JUDGMENT

Ann A. Birch

Clerk

/s/ Judith M. McDowell

Judith M. McDowell

Deputy Clerk

Date: November 29, 1988

8la

Appendix F

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

No. 88-2884

GEORGETOWN STEEL CORPORATION

Plaintiff - Appellant

Vv.

UNION CARBIDE CORPORATION;

Defendant - Appellant

LAW ENGINEERING TESTING ‘COMPANY;

PITTSBURGH TESTING LABORATORY, INC.

Defendants - Appellees

No. 88-2979

GEORGETOWN STEEL CORPORATION

Plaintiff - Appellant

Vv.

UNION CARBIDE CORPORATION;

Defendant - Appellant

LAW ENGINEERING TESTING COMPANY;

PITTSBURGH TESTING LABORATORY, INC.

Defendants - Appellees

82a

On Petition for Rehearing with Suggestion for Rehearing

In Banc

The appellant's petition for rehearing and suggestion

for rehearing in banc were submitted to this Court. As no

member of this Court or the panel requested a poll on the

suggestion for rehearing in banc, and

As the panel considered the petition for rehearing

and is of the opinion that it should be denied,

IT IS ORDERED that the petition for rehearing and

suggestion for rehearing in banc are denied.

Entered at the direction of Judge Hall with the con-

currence of Judge Widener and Judge Anderson, United

States District Judge for the District of South Carolina, sit-

ting by designation.

For the Court,

CLERK

83a

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.